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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
Pre-Effective Amendment No. _____ [ ]
Post-Effective Amendment No. 33 [X]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. 36
(Check appropriate box or boxes.)
GAM Funds, Inc.
- --------------------------------------------------------------------------------
(Exact Name of Registrant as Specified in Charter)
135 East 57 Street New York, NY 10022
- --------------------------------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code 212-407-4600
- --------------------------------------------------------------------------------
GAM Funds, Inc. (Same)
- --------------------------------------------------------------------------------
(Name and Address of Agent for Service)
Approximate Date of Proposed Public Offering -----------------------------------
It is proposed that this filing will become effective (check appropriate box)
[ ] immediately upon filing pursuant to paragraph (b)
[ ] on (date) pursuant to paragraph (b)
[X] 60 days after filing pursuant to paragraph (a)(1)
[ ] on (date) pursuant to paragraph (a)(1)
[ ] 75 days after filing pursuant to paragraph (a)(2)
[ ] on 4/30/00 pursuant to paragraph (a)(2) of rule 485.
If appropriate, check the following box:
[ ] this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
Omit from the facing sheet reference to the other Act if the Registration
Statement or amendment is filed under only one of the Acts. Include the
"Approximate Date of Proposed Public Offering" and "Title of Securities Being
Registered" only where securities are being registered under the Securities Act
of 1933.
Form N-1A is to be used by open-end management investment companies, except
insurance company separate accounts and small business investment companies
licensed under the United States Small Business Administration, to register
under the Investment Company Act of 1940 and to offer their shares under the
Securities Act of 1933. The Commission has designed Form N-1A to provide
investors with information that will assist them in making a decision about
investing in an investment company eligible to use the Form. The Commission also
may use the information provided on Form N-1A in its regulatory, disclosure
review, inspection, and policy making roles.
A Registrant is required to disclose the information specified by Form
N-1A, and the Commission will make this information public. A Registrant is not
required to respond to the collection of information contained in Form N-1A
unless the Form displays a currently valid Office of Management and Budget
("OMB") control number. Please direct comments concerning the accuracy of the
information collection burden estimate and any suggestions for reducing the
burden to Secretary, Securities and Exchange Commission, 450 5th Street, N.W.,
Washington, D.C. 20549-6009. The OMB has reviewed this collection of information
under the clearance requirements of 44 U.S.C. Sec. 3507.
POTENTIAL PERSONS WHO ARE TO RESPOND TO THE COLLECTION
OF INFORMATION CONTAINED IN THIS FORM ARE NOT REQUIRED TO
RESPOND UNLESS THE FORM DISPLAYS A CURRENTLY VALID OMB
CONTROL NUMBER.
SEC 2052 (5-98)
<PAGE>
GAM GLOBAL FUND
GAM INTERNATIONAL FUND
GAM PACIFIC BASIN FUND
GAM JAPAN CAPITAL FUND
GAM EUROPE FUND
GAM NORTH AMERICA FUND
GAMERICA CAPITAL
FUND
GLOBAL ASSET MANAGEMENT
================================
GAM Funds, Inc.
PROSPECTUS O APRIL 30, 2000
GAM Funds, Inc. (the "Company") is a diversified, open-end investment company.
The Company offers investors the opportunity to invest in seven different
portfolios (the "Funds") which invest 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 investment
management company (the "GAM Money Market Account").
The Funds described in this Prospectus are managed by GAM International
Management Limited ("GIML"). Fayez Sarofim & Co. ("Sarofim") serves as
co-investment advisor to the GAM North America Fund. GAM and Sarofim are
collectively referred to as the "Investment Advisors." GAM Services Inc. ("GAM
Services"), an affiliate of GIML, serves as the principal underwriter for the
Funds' securities.
Neither the Securities and Exchange Commission ("SEC") nor any state securities
commission has approved the Funds' shares as an investment. Neither the SEC nor
any state security commission has determined if this prospectus is accurate or
complete. Any representation to the contrary is a criminal offense.
INVESTMENTS IN THE FUNDS ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY, ANY BANK, AND ARE NOT FEDERALLY INSURED BY THE FEDERAL DEPOSIT
INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER AGENCY.
INVESTMENTS IN THE FUNDS INVOLVE INVESTMENT RISK, INCLUDING THE POSSIBLE LOSS OF
PRINCIPAL.
<PAGE>
TABLE OF CONTENTS
================================================================================
I. RISK AND RETURN SUMMARY
GAM Global Fund 1
GAM International Fund 6
GAM Pacific Basin Fund 10
GAM Japan Capital Fund 14
GAM Europe Fund 18
GAM North America Fund 22
GAMerica Capital Fund 26
II. MANAGEMENT OF THE FUNDS 30
III. SHAREHOLDER INFORMATION
Choosing the appropriate share class 32
How to buy shares 36
How to sell shares 37
How to exchange shares 38
Account services 39
Dividends and tax matters 39
IV. FINANCIAL HIGHLIGHTS 40
<PAGE>
I. RISK AND RETURN SUMMARY
================================================================================
GAM GLOBAL FUND
INVESTMENT OBJECTIVE
The Fund seeks long-term capital appreciation. Upon written notice to
shareholders, the Fund's investment objective may be changed without a vote of
shareholders.
INVESTMENT STRATEGY
The Fund invests primarily in common stocks of companies in any country of the
world, including the United States, Canada, Europe and the Pacific Basin. Under
normal market conditions, the Fund will invest in stocks issued in at least
three different countries. The Fund will not acquire more than 10% of the
outstanding voting securities of any one issuer. No more than 25% of the Fund's
total assets will be invested in any one industry.
If the investment advisor determines that the long-term capital appreciation of
bonds may equal or exceed the return on stocks, then the Fund may invest
substantially in bonds issued either by governments or government agencies or
corporations. The Fund may not invest more than 5% of its assets in bonds rated
lower than investment grade.
In selecting either a stock or bond, the investment advisor uses a "top down"
three-step approach screening potential investments by country, sector and
security. Countries are selected based on an economic analysis that examines,
among other factors, interest rates, growth rates, the inflation outlook and the
strength of the currency. Generally, the investment advisor prefers companies
with:
o Good industry fundamentals
o "Pricing power" (the ability to raise prices at or above the rate of
inflation)
o High market share
o Some degree of "organic" growth not tied to the overall state of the economy
To determine the relative attractiveness of stocks versus bonds, the investment
advisor compares the stock's earnings yield to short-and long-term interest
rates. Sales are triggered by an assessment that the security is no longer a
good value or that fundamental prospects have deteriorated.
The Fund, for temporary defensive purposes, may invest in short-term bonds of
foreign and United States companies, foreign governments, the U.S. government
and its agencies and instrumentalities, as well as money market instruments
denominated in U.S. dollars or a foreign currency. At no point will more than
35% of the Fund's portfolio be held in cash or cash equivalents, except when the
Fund is taking temporary defensive measures.
The Fund may from time to time engage in short selling of securities. Short
selling is an investment technique wherein the Fund sells a security it does not
own anticipating a decline in the market value of the security. To complete the
transaction, the Fund must borrow the security to make delivery to the buyer.
The Fund is obligated to replace the security borrowed by purchasing it
subsequently at the market price at the time of replacement. The price at such
time may be more or less than the price at which the security was sold by the
Fund, which would result in a loss or gain. Short sales by the Fund involve
risk. If the Fund incorrectly predicts that the price of the borrowed security
will decline, the Fund will have to replace the securities with securities of a
greater value than the amount received from the sale. As a result, losses from
short sales differ from losses that could be incurred from a purchase of a
security, because losses from short sales may be unlimited, whereas losses from
purchases can equal only the total amount invested. The Fund may also make short
sales "against the box" wherein the Fund enters into a short sale of a security
it owns.
The frequency of short sales will vary substantially under different market
conditions, and no specified portion of Fund assets as a matter of practice will
be committed to short sales. However, no securities will be sold short if, after
effect is given to any such short sale, the total market value of all securities
sold short would exceed 20% of the value of the Fund's net assets.
The Fund may from time to time utilize certain sophisticated investment
techniques, including derivatives. Derivatives are financial instruments which
derive their value from the performance of an underlying asset--another
security, a commodity, or an index. Examples of these include:
o FORWARD FOREIGN EXCHANGE CONTRACTS When the Fund buys a foreign security, it
generally does so in a foreign currency. That currency has a price, and that
price fluctuates. In order to reduce the risk of currency price swings or for
other purposes, the Fund may buy for-
1
----
GAM FUNDS INC PROSPECTUS / RISK AND RETURN SUMMARY
<PAGE>
================================================================================
ward foreign exchange contracts on foreign currencies. These contracts "lock
in" a price for the currency at a certain future date. The Fund may also use
put and call options on foreign currencies.
o ADJUSTABLE RATE INDEX NOTES (ARINS) ARINs are a form of promissory note
issued by brokerage firms or other counterparties which pay more principal or
interest if the value of another security falls, and less principal or
interest if the value of another security rises.
o OPTIONS AND WARRANTS An option is a contract giving the owner the right to
buy ("call option") or sell ("put option") a security at a designated price
("strike price") on a certain date. A warrant is the equivalent of a call
option written by the issuer of the underlying security.
o FUTURES CONTRACTS Futures contracts obligate one party to deliver and the
other party to purchase a specific quantity of a commodity or a financial
instrument at a designated future date, time and place. Stock index futures
contracts call for a cash payment based on the increase or decrease in the
value of an index.
PRINCIPAL RISKS
You could lose all or a portion of your investment in the Fund. Stock and bond
prices fluctuate in response to many factors including interest rates, general
economic conditions, investor perceptions and market liquidity. Investing in
foreign securities generally involve greater risk than investing in U.S.
securities. Foreign securities prices may vary more widely than those of U.S.
securities because of economic, financial, political or social factors
including:
o POLITICAL CONDITIONS Government regulation or action may adversely affect
foreign markets through the imposition of capital controls, the
nationalization of companies or industries, excessive taxes, etc.
o INFORMATION There is likely to be less available information about foreign
securities than is available about U.S. companies. Foreign companies may not
be subject to the same accounting standards as U.S. companies. Foreign
issuers may be subject to less stringent government supervision or regulation
of financial markets and business practices than U.S. issuers.
o LIQUIDITY Non-U.S. securities may trade on small exchanges less well
regulated than U.S. exchanges, may be more difficult to buy or sell on a
particular day and may be more volatile than U.S. securities.
o COMMISSIONS AND FEES Brokerage fees and commissions are generally higher
abroad than in the U.S.
o EMERGING MARKETS Countries in emerging markets may have relatively unstable
governments, economies based on only a few industries, and securities markets
that trade a small number of issues.
o CURRENCY Fluctuations in currencies, local withholding and other taxes may
adversely impact the price of the Fund's investment.
Derivative instruments involve substantial risk, because a relatively small
change in the security or index underlying a derivative can produce a
disproportionately large profit or loss. The Fund may gain or lose more than its
initial investment. If the Fund has a derivative investment which begins to
deteriorate, there may be no way to sell it and avoid further losses, because no
buyer may be available. In addition, the securities underlying some derivatives
may be illiquid. The Fund may be forced to hold a position until exercise or
expiration, which could result in losses. Hedging, by its nature, involves
predicting the probable direction of price movements; if the Fund predicts
incorrectly, it could lose money--more than if it had not hedged at all. Hedging
cannot eliminate fluctuations in the prices of foreign securities, and there is
no assurance that such hedging attempts will be successful.
2
----
FOR MORE INFORMATION PLEASE CALL 800-426-4685
<PAGE>
================================================================================
The Fund may enter into foreign currency forward contracts, repurchase
agreements, ARINs, and certain other types of futures, options and derivatives
with banks, brokerage firms and other investors in over-the-counter markets, not
through any exchange. The Fund may experience losses or delays if a counterparty
to any such contract defaults or goes into bankruptcy.
An investment in the Fund is not a deposit of a bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency.
WHO MAY WANT TO INVEST?
The Fund may best suit those investors who want long-term capital appreciation,
and who can tolerate the risks involved with stock and foreign investing.
3
----
GAM FUNDS INC PROSPECTUS / RISK AND RETURN SUMMARY
<PAGE>
GAM GLOBAL FUND
PAST PERFORMANCE AND EXPENSES
A BAR DISPLAYS THE ANNUAL RETURN OF THE FUND FOR EACH YEAR. THIS ILLUSTRATES THE
VARIABILITY OF THE PERFORMANCE FROM YEAR TO YEAR. FUND PERFORMANCE SHOWN DOES
NOT REFLECT CLASS A SALES CHARGES, BUT INCLUDES THE REINVESTMENT OF DIVIDENDS
AND CAPITAL GAINS. PERFORMANCE WOULD BE LOWER IF SALES CHARGES WERE INCLUDED.
PAST PERFORMANCE DOES NOT GUARANTEE OR PREDICT FUTURE RESULTS.
================================================================================
GAM GLOBAL FUND
CLASS A SHARE ANNUAL TOTAL RETURNS
AS OF DECEMBER 31
90 -0.1126
91 0.1061
92 -0.0465
93 0.753
94 -0.1615
95 0.3625
96 0.1274
97 0.3495
98 0.0257
99 0.1423
================================================================================
HIGHEST AND LOWEST RETURNS
Highest Performing Quarter 27.26% in 4th quarter of 1993
Lowest Performing Quarter -13.76% in 4th quarter of 1987
FUND PERFORMANCE SHOWN DOES NOT REFLECT SALES CHARGES. THE MSCI WORLD INDEX IS A
BROAD MARKET INDEX USED FOR COMPARATIVE PURPOSES. PAST PERFORMANCE DOES NOT
GUARANTEE OR PREDICT FUTURE RESULTS.
================================================================================
GAM GLOBAL FUND
1-, 5-, AND 10-YEAR (OR LIFE-OF-CLASS) AVERAGE ANNUAL TOTAL RETURN FOR ALL
RELEVANT SHARE CLASSES PLUS A COMPARISON TO THE MSCI WORLD INDEX AS OF
DECEMBER 31, 1999
CLASS 1 YEAR 5 YEAR 10 YEAR
(INCEPTION DATE) (OR LIFE-OF-CLASS)
A SHARES 14.23% 19.42% 12.82%
(MAY 28, 1986)
B SHARES 13.34% NA 1.98%*
(MAY 26, 1998)
C SHARES 13.25% NA 1.66%*
(MAY 19, 1998)
D SHARES 13.94% NA 15.94%*
(OCTOBER 6, 1995)
MSCI WORLD INDEX** 25.34% 20.25% 11.98%
* Returns of MSCI World Index were for the Life-of-Class B: 20.84%; C: 20.90%
and D: 20.21%.
** The MSCI World Index is an unmanaged, broad-based index of foreign and
domestic securities and includes reinvestment of dividends. Investors may not
purchase indices directly.
4
----
FOR MORE INFORMATION PLEASE CALL 800-426-4685
<PAGE>
FUND INVESTORS PAY VARIOUS EXPENSES EITHER DIRECTLY OR INDIRECTLY. THIS TABLE
SHOWS THE EXPENSES FOR THE PAST YEAR, ADJUSTED TO REFLECT ANY CHARGES. ACTUAL OR
FUTURE EXPENSES MAY BE DIFFERENT.
FEES AND EXPENSES OF THE FUND
================================================================================
GAM GLOBAL FUND INVESTOR EXPENSES
SHAREHOLDER TRANSACTION EXPENSES
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C CLASS D
<S> <C> <C> <C> <C>
SALES CHARGES (paid directly from your investment)
Maximum Sales Charge 5.00% 0.00% 0.00% 3.50%
Maximum Deferred Sales Charge 0.00%* 5.00% 1.00% 0.00%
ANNUAL FUND OPERATING EXPENSES (% of net assets)
Management Fees
(after expense reimbursal) 1.00% 1.00% 1.00% 1.00%
Distribution (12b-1) Fees 0.30% 1.00% 1.00% 0.50%
Other Expenses 0.59% 0.76% 0.77% 0.66%
TOTAL FUND OPERATING EXPENSES 1.89% 2.76% 2.77% 2.16%
</TABLE>
* Except for investments of $1 million or more. See "Information about
contingent deferred sales charge."
THESE EXAMPLES CAN HELP YOU COMPARE THE COST OF INVESTING IN THE FUND WITH THE
COST OF INVESTING IN OTHER MUTUAL FUNDS. THE EXAMPLES ASSUME A 5% RETURN EACH
YEAR, WITH OPERATING EXPENSES STAYING THE SAME. YOUR ACTUAL RETURNS AND EXPENSES
MAY BE DIFFERENT.
EXAMPLE #1 ASSUMES YOU INVEST $10,000 IN THE FUND FOR THE PERIODS SHOWN, THEN
REDEEM ALL YOUR SHARES AT THE END OF THOSE PERIODS.
EXAMPLE #2 ASSUMES YOU INVEST $10,000 IN THE FUND FOR THE PERIODS SHOWN, BUT YOU
DO NOT REDEEM YOUR SHARES AT THE END OF THOSE PERIODS.
================================================================================
EXAMPLES
EXPENSES OF HYPOTHETICAL $10,000 INVESTMENT
IN GAM GLOBAL FUND
CLASS A CLASS B* CLASS C CLASS D
EXAMPLE #1
For one year 682 779 380 561
For three years 1,064 1,156 859 1,002
For five years 1,470 1,659 1,464 1,469
For ten years 2,601 2,881 3,099 2,756
EXAMPLE #2
For one year 682 279 280 561
For three years 1,064 856 859 1,002
For five years 1,470 1,459 1,464 1,469
For ten years 2,601 2,881 3,099 2,756
* Class B converts to Class A at end of Year 8.
5
----
GAM FUNDS INC PROSPECTUS / RISK AND RETURN SUMMARY
<PAGE>
================================================================================
GAM INTERNATIONAL FUND
INVESTMENT OBJECTIVE
The Fund seeks long-term capital appreciation. Upon written notice to
shareholders, the Fund's investment objective may be changed without a vote of
shareholders.
INVESTMENT STRATEGY
The Fund invests primarily in common stocks of companies in any country of the
world, other than the United States - normally Canada, Europe and the Pacific
Basin. Under normal market conditions, the Fund will invest in stocks issued in
at least three different countries. The Fund will not acquire more than 10% of
the outstanding voting securities of any one issuer. No more than 25% of the
Fund's total assets will be invested in any one industry.
In addition, if the investment advisor determines that the long-term capital
appreciation of bonds may equal or exceed the return on stocks, then the Fund
may invest substantially in bonds issued either by governments or government
agencies or corporations. The Fund may not invest more than 5% of assets in
bonds rated lower than investment grade.
In selecting either a stock or bond, the investment advisor uses a "top down"
three-step approach screening potential investments by country, sector and
security. Countries are selected based on an economic analysis that examines,
among other factors, interest rates, growth rates, the inflation outlook and the
strength of the currency. Generally, the investment advisor prefers companies
with:
o Good industry fundamentals
o "Pricing power" (the ability to raise prices at or above the rate of
inflation)
o High market share
o Some degree of "organic" growth not tied to the overall state of the economy
To determine the relative attractiveness of stocks versus bonds, the investment
advisor compares the stock's earnings yield to short-and long-term interest
rates. Sales are triggered by an assessment that the security is no longer a
good value or that fundamental prospects have deteriorated.
The Fund, for temporary defensive purposes, may invest in short-term bonds of
foreign and United States companies, foreign governments, the U.S. government
and its agencies and instrumentalities, as well as money market instruments
denominated in U.S. dollars or a foreign currency. At no point will more than
35% of the Fund's portfolio be held in cash or cash equivalents, except when the
Fund is taking temporary defensive measures.
The Fund may from time to time engage in short selling of securities. Short
selling is an investment technique wherein the Fund sells a security it does not
own anticipating a decline in the market value of the security. To complete the
transaction, the Fund must borrow the security to make delivery to the buyer.
The Fund is obligated to replace the security borrowed by purchasing it
subsequently at the market price at the time of replacement. The price at such
time may be more or less than the price at which the security was sold by the
Fund, which would result in a loss or gain. Short sales by the Fund involve
risk. If the Fund incorrectly predicts that the price of the borrowed security
will decline, the Fund will have to replace the securities with securities of a
greater value than the amount received from the sale. As a result, losses from
short sales differ from losses that could be incurred from a purchase of a
security, because losses from short sales may be unlimited, whereas losses from
purchases can equal only the total amount invested. The Fund may also make short
sales "against the box" wherein the Fund enters into a short sale of a security
it owns.
The frequency of short sales will vary substantially under different market
conditions, and no specified portion of Fund assets as a matter of practice will
be committed to short sales. However, no securities will be sold short if, after
effect is given to any such short sale, the total market value of all securities
sold short would exceed 20% of the value of the Fund's net assets.
The Fund may from time to time utilize certain sophisticated investment
techniques, including derivatives. Derivatives are financial instruments which
derive their value from the performance of an underlying asset--another
security, a commodity, or an index. Examples of these include:
o FORWARD FOREIGN EXCHANGE CONTRACTS When a Fund buys a foreign security, it
generally does so in a foreign currency. That currency has a price, and that
price fluctuates. In order to reduce the risk of currency price swings or for
other purposes, the Fund may buy forward foreign exchange contracts on
foreign currencies. These contracts "lock in" a price for the currency at a
certain future date. The Fund may also use put and call options on foreign
currencies.
o ADJUSTABLE RATE INDEX NOTES (ARINS) ARINs are a form of promissory note
issued by brokerage firms or other counterparties which pay more principal or
interest if the value of another security falls, and less principal or
interest if the value of another security rises.
o OPTIONS AND WARRANTS An option is a contract giving the owner the right to
buy ("call option") or sell ("put option") a security at a designated price
("strike price") on a certain date. A warrant is the equivalent of a call
option written by the issuer of the underlying security.
o FUTURES CONTRACTS Futures contracts obligate one party to deliver and the
other party to purchase a specific quantity of a commodity or a financial
instrument at a designated future date, time and place. Stock index futures
contracts call for a cash payment based on the increase or decrease in the
value of an index.
6
----
FOR MORE INFORMATION PLEASE CALL 800-426-4685
<PAGE>
================================================================================
PRINCIPAL RISKS
You could lose all or a portion of your investment in the Fund. Stock and bond
prices fluctuate in response to many factors including interest rates, general
economic conditions, investor perceptions and market liquidity. Investing in
foreign securities generally involve greater risk than investing in U.S.
securities. Foreign securities prices may vary more widely than those of U.S.
securities because of economic, financial, political or social factors
including:
o POLITICAL CONDITIONS Government regulation or action may adversely affect
foreign markets through the imposition of capital controls, the
nationalization of companies or industries, excessive taxes, etc.
o INFORMATION There is likely to be less available information about foreign
securities than is available about U.S. companies. Foreign companies may not
be subject to the same accounting standards as U.S. companies. Foreign
issuers may be subject to less stringent government supervision or regulation
of financial markets and business practices than U.S. issuers.
o LIQUIDITY Non-U.S. securities may trade on small exchanges less well
regulated than U.S. exchanges, may be more difficult to buy or sell on a
particular day and may be more volatile than U.S. securities.
o COMMISSIONS AND FEES Brokerage fees and commissions are generally higher
abroad than in the U.S.
o EMERGING MARKETS Countries in emerging markets may have relatively unstable
governments, economies based on only a few industries, and securities
markets that trade a small number of issues.
o CURRENCY Fluctuations in currencies, local withholding and other taxes may
adversely impact the price of the Fund's investment.
Derivative instruments involve substantial risk, because a relatively small
change in the security or index underlying a derivative can produce a
disproportionately large profit or loss. The Fund may gain or lose more than its
initial investment. If the Fund has a derivative investment which begins to
deteriorate, there may be no way to sell it and avoid further losses, because no
buyer may be available. In addition, the securities underlying some derivatives
may be illiquid. The Fund may be forced to hold a position until exercise or
expiration, which could result in losses. Hedging, by its nature, involves
predicting the probable direction of price movements; if the Fund predicts
incorrectly, it could lose money--more than if it had not hedged at all. Hedging
cannot eliminate fluctuations in the prices of foreign securities, and there is
no assurance that such hedging attempts will be successful.
The Fund may enter into foreign currency forward contracts, repurchase
agreements, ARINs, and certain other types of futures, options and derivatives
with banks, brokerage firms and other investors in over-the-counter markets, not
through any exchange. The Fund may experience losses or delays if a counterparty
to any such contract defaults or goes into bankruptcy.
An investment in the Fund is not a deposit of a bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency.
WHO MAY WANT TO INVEST?
The Fund may best suit those investors who want long-term capital appreciation,
and who can tolerate the risks involved with stock and foreign investing.
7
----
GAM FUNDS INC PROSPECTUS / RISK AND RETURN SUMMARY
<PAGE>
GAM INTERNATIONAL FUND
PAST PERFORMANCE AND EXPENSES
A BAR DISPLAYS THE ANNUAL RETURN OF THE FUND FOR EACH YEAR. THIS ILLUSTRATES THE
VARIABILITY OF THE PERFORMANCE FROM YEAR TO YEAR. FUND PERFORMANCE SHOWN DOES
NOT REFLECT CLASS A SALES CHARGES, BUT INCLUDES THE REINVESTMENT OF DIVIDENDS
AND CAPITAL GAINS. PERFORMANCE WOULD BE LOWER IF SALES CHARGES WERE INCLUDED.
PAST PERFORMANCE DOES NOT GUARANTEE OR PREDICT FUTURE RESULTS.
================================================================================
GAM INTERNATIONAL FUND
CLASS A SHARES ANNUAL TOTAL RETURNS
AS OF DECEMBER 31
90 -0.073
91 0.1556
92 0.0308
93 0.7996
94 -0.1023
95 0.3009
96 0.0898
97 0.2893
98 0.0722
99 0.0699
================================================================================
HIGHEST AND LOWEST RETURNS
Highest Performing Quarter 31.00% in 4th quarter of 1999
Lowest Performing Quarter -15.72% in 4th quarter of 1987
FUND PERFORMANCE SHOWN DOES NOT REFLECT SALES CHARGES. THE MSCI EAFE INDEX IS A
BROAD MARKET INDEX USED FOR COMPARATIVE PURPOSES. PAST PERFORMANCE DOES NOT
GUARANTEE OR PREDICT FUTURE RESULTS.
================================================================================
GAM INTERNATIONAL FUND
1-, 5-, AND 10-YEAR (OR LIFE-OF-CLASS) AVERAGE ANNUAL TOTAL RETURN FOR ALL
RELEVANT SHARE CLASSES PLUS A COMPARISON TO THE MSCI EAFE INDEX AS OF DECEMBER
31, 1999
CLASS 1 YEAR 5 YEAR 10 YEAR
(INCEPTION DATE) (OR LIFE-OF-CLASS)
A SHARES 6.99% 15.96% 14.10%
(JANUARY 2, 1985)
B SHARES 6.25% NA -2.04%*
(MAY 26, 1998)
C SHARES 6.32% NA -0.61%*
(MAY 19, 1998)
D SHARES 6.82% NA 13.88%*
(SEPTEMBER 18, 1998)
MSCI EAFE INDEX** 27.30% 13.15% 7.35%
* Returns of MSCI EAFE Index were for the Life-of-Class B: 17.72%; C: 19.30%
and D: 14.34%.
** The MSCI EAFE (Europe, Australia, Far East) Index is an unmanaged index of
foreign stocks in Austria, Australia, Belgium, Denmark, Finland, France,
Germany, Hong Kong, Ireland, Italy, Japan, Netherlands, New Zealand, Norway,
Portugal, Singapore, Spain, Sweden, Switzerland and the UK and includes
reinvestment of dividends. Investors may not purchase indices directly.
8
----
FOR MORE INFORMATION PLEASE CALL 800-426-4685
<PAGE>
FUND INVESTORS PAY VARIOUS EXPENSES EITHER DIRECTLY OR INDIRECTLY. THIS TABLE
SHOWS THE EXPENSES FOR THE PAST YEAR, ADJUSTED TO REFLECT ANY CHARGES. ACTUAL OR
FUTURE EXPENSES MAY BE DIFFERENT.
FEES AND EXPENSES OF THE FUND
GAM INTERNATIONAL FUND INVESTOR EXPENSES
SHAREHOLDER TRANSACTION EXPENSES
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C CLASS D
<S> <C> <C> <C> <C>
SALES CHARGES (paid directly from your investment)
Maximum Sales Charge 5.00% 0.00% 0.00% 3.50%
Maximum Deferred Sales Charge 0.00%* 5.00% 1.00% 0.00%
ANNUAL FUND OPERATING EXPENSES (% of net assets)
Management Fees
(after expense reimbursal) 1.00% 1.00% 1.00% 1.00%
Distribution (12b-1) Fees 0.30% 1.00% 1.00% 0.50%
Other Expenses 0.46% 0.48% 0.48% 0.44%
TOTAL FUND OPERATING EXPENSES 1.76% 2.48% 2.48% 1.94%
</TABLE>
* Except for investments of $1 million or more. See "Information about
contingent deferred sales charge."
THESE EXAMPLES CAN HELP YOU COMPARE THE COST OF INVESTING IN THE FUND WITH THE
COST OF INVESTING IN OTHER MUTUAL FUNDS. THE EXAMPLES ASSUME A 5% RETURN EACH
YEAR, WITH OPERATING EXPENSES STAYING THE SAME. YOUR ACTUAL RETURNS AND EXPENSES
MAY BE DIFFERENT.
EXAMPLE #1 ASSUMES YOU INVEST $10,000 IN THE FUND FOR THE PERIODS SHOWN, THEN
REDEEM ALL YOUR SHARES AT THE END OF THOSE PERIODS.
EXAMPLE #2 ASSUMES YOU INVEST $10,000 IN THE FUND FOR THE PERIODS SHOWN, BUT YOU
DO NOT REDEEM YOUR SHARES AT THE END OF THOSE PERIODS.
EXAMPLES
EXPENSES OF HYPOTHETICAL $10,000 INVESTMENT
IN GAM INTERNATIONAL FUND
CLASS A CLASS B* CLASS C CLASS D
EXAMPLE #1
For one year 670 751 351 540
For three years 1,026 1,073 773 938
For five years 1,406 1,521 1,321 1,360
For ten years 2,469 2,639 2,816 2,535
EXAMPLE #2
For one year 670 251 251 540
For three years 1,026 773 773 938
For five years 1,406 1,321 1,321 1,360
For ten years 2,469 2,639 2,816 2,535
* Class B converts to Class A at the end of Year 8.
9
----
GAM FUNDS INC PROSPECTUS / RISK AND RETURN SUMMARY
<PAGE>
================================================================================
GAM PACIFIC BASIN FUND
INVESTMENT OBJECTIVE
The Fund seeks long-term capital appreciation. Upon written notice to
shareholders, the Fund's investment objective may be changed without a vote of
shareholders.
INVESTMENT STRATEGY
The Fund invests primarily in common stocks 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. Under
normal market conditions, the Fund will invest in stocks issued in at least
three different countries. The Fund will not acquire more than 10% of the
outstanding voting securities of any one issuer. More than 25% of the value of
the total assets of the Fund will ordinarily be invested in the financial
services sector, which sector includes banking, financial services, insurance
and real estate. The Fund has a fundamental policy of concentrating at least 25%
of its assets in the financial services sector.
In addition, if the investment advisor determines that the long-term capital
appreciation of bonds may equal or exceed the return on stocks, then the Fund
may invest substantially in bonds issued either by governments or government
agencies or corporations. The Fund may not invest more than 5% of assets in
bonds rated lower than investment grade.
In selecting investments for the Fund, the investment advisor looks first at the
economic environment and will attempt to exclude countries, sector and stocks
viewed as over-valued. Within those markets identified for investment, the
investment advisor employs a fundamental investment process focusing on factors
such as:
o Experience and shareholder focus of company management
o Financial health including the strength of the balance sheet, cash flow,
earnings quality and long-term growth
o Competitive position within the industry
o Price of the stock compared to forecasted growth rate
o Liquidity as measured by market capitalization, daily trading volume, etc.
Stocks selected tend to have higher return on equity, higher growth in earnings
per share and higher growth in cash flow per share than the benchmark index.
Sales are triggered by an assessment that the stock is no longer a good value or
that fundamental prospects have deteriorated.
The Fund, for temporary defensive purposes, may invest in short-term bonds of
foreign and United States companies, foreign governments, the U.S. government
and its agencies and instrumentalities as well as money market instruments
denominated in U.S. dollars or a foreign currency. At no point will more than
35% of the Fund's portfolio be held in cash or cash equivalents, except when the
Fund is taking temporary defensive measures.
The Fund may from time to time utilize certain sophisticated investment
techniques, including derivatives. Derivatives are financial instruments which
derive their value from the performance of an underlying asset--another
security, a commodity, or an index. Examples of these include:
o FORWARD FOREIGN EXCHANGE CONTRACTS When a Fund buys a foreign security, it
generally does so in a foreign currency. That currency has a price, and that
price fluctuates. In order to reduce the risk of currency price swings or for
other purposes, the Fund may buy forward foreign exchange contracts on
foreign currencies. These contracts "lock in" a price for the currency at a
certain future date. The Fund may also use put and call options on foreign
currencies.
o OPTIONS AND WARRANTS An option is a contract giving the owner the right to
buy ("call option") or sell ("put option") a security at a designated price
("strike price") on a certain date. A warrant is the equivalent of a call
option written by the issuer of the underlying security.
o FUTURES CONTRACTS Futures contracts obligate one party to deliver and the
other party to purchase a specific quantity of a commodity or a financial
instrument at a designated future date, time and place. Stock index futures
contracts call for a cash payment based on the increase or decrease in the
value of an index.
PRINCIPAL RISKS
You could lose all or a portion of your investment in the Fund. Stock and bond
prices fluctuate in response to many factors including interest rates, general
economic
10
----
FOR MORE INFORMATION PLEASE CALL 800-426-4685
<PAGE>
================================================================================
conditions, investor perceptions and market liquidity. Since the Fund invests
principally in the Pacific Basin, it will be impacted by regional events there
to a greater extent than a more broadly diversified fund. Investing in foreign
securities generally involve greater risk than investing in U.S. securities.
Foreign securities prices may vary more widely than those of U.S. securities
because of economic, financial, political or social factors including:
o POLITICAL CONDITIONS Government regulation or action may adversely affect
foreign markets through the imposition of capital controls, the
nationalization of companies or industries, excessive taxes, etc.
o INFORMATION There is likely to be less available information about foreign
securities than is available about U.S. companies. Foreign companies may not
be subject to the same accounting standards as U.S. companies. Foreign
issuers may be subject to less stringent government supervision or regulation
of financial markets and business practices than U.S. issuers.
o LIQUIDITY Non-U.S. securities may trade on small exchanges less well
regulated than U.S. exchanges, may be more difficult to buy or sell on a
particular day and may be more volatile than U.S. securities.
o COMMISSIONS AND FEES Brokerage fees and commissions are generally higher
abroad than in the U.S.
o EMERGING MARKETS Countries in emerging markets may have relatively unstable
governments, economies based on only a few industries, and securities markets
that trade a small number of issues.
o CURRENCY fluctuations in currencies, local withholding and other taxes may
adversely impact the price of the Funds investment.
Derivative instruments involve substantial risk, because a relatively small
change in the security or index underlying a derivative can produce a
disproportionately large profit or loss. The Fund may gain or lose more than its
initial investment. If the Fund has a derivative investment which begins to
deteriorate, there may be no way to sell it and avoid further; losses, because
no buyer may be available. In addition, the securities underlying some
derivatives may be illiquid. The Fund may be forced to hold a position until
exercise or expiration, which could result in losses. Hedging, by its nature,
involves predicting the probable direction of price movements; if the Fund
predicts incorrectly, it could lose money--more than if it had not hedged at
all. Hedging cannot eliminate fluctuations in the prices of foreign securities,
and there is no assurance that such hedging attempts will be successful.
The Fund may enter into foreign currency forward contracts, repurchase
agreements, ARINs, and certain other types of futures, options and derivatives
with banks, brokerage firms and other investors in over-the-counter markets, not
through any exchange. The Fund may experience losses or delays if a counterparty
to any such contract defaults or goes into bankruptcy.
Since the Fund will concentrate its investments in the financial services
sector, it may be subject to greater share price fluctuations than a
non-concentrated fund. Because the Fund invests primarily in one sector, there
is the risk that the Fund will perform poorly during a downturn in that sector.
Also, changes in government policies and regulation, interest rates, currency
exchange rates, and other factors affecting the financial markets may affect
businesses in the finance sector more significantly.
An investment in the Fund is not a deposit of a bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency.
WHO MAY WANT TO INVEST?
The Fund may best suit those investors who want long-term capital appreciation,
and who can tolerate the risks involved with stock and foreign investing. Also,
the Fund may only be appropriate if you can tolerate concentrated investments in
a single market sector. The Fund should be considered a vehicle for
diversification and should not be considered a balanced investment program by
itself.
11
----
GAM FUNDS INC PROSPECTUS / RISK AND RETURN SUMMARY
<PAGE>
GAM PACIFIC BASIN FUND
PAST PERFORMANCE AND EXPENSES
A BAR DISPLAYS THE ANNUAL RETURN OF THE FUND FOR EACH YEAR. THIS ILLUSTRATES THE
VARIABILITY OF THE PERFORMANCE FROM YEAR TO YEAR. FUND PERFORMANCE SHOWN DOES
NOT REFLECT CLASS A SALES CHARGES, BUT INCLUDES THE REINVESTMENT OF DIVIDENDS
AND CAPITAL GAINS. PERFORMANCE WOULD BE LOWER IF SALES CHARGES WERE INCLUDED.
PAST PERFORMANCE DOES NOT GUARANTEE OR PREDICT FUTURE RESULTS.
GAM PACIFIC BASIN FUND
CLASS A SHARE ANNUAL TOTAL RETURNS
AS OF DECEMBER 31
90 -0.0821
91 0.1671
92 -0.0037
93 0.5152
94 0.0741
95 0.045
96 -0.0039
97 -0.3
98 -0.0399
99 0.7491
================================================================================
HIGHEST AND LOWEST RETURNS
Highest Performing Quarter 36.64% in 4th quarter of 1999
Lowest Performing Quarter -29.28% in 4th quarter of 1987
FUND PERFORMANCE SHOWN DOES NOT REFLECT SALES CHARGES. THE MSCI PACIFIC INDEX IS
A BROAD MARKET INDEX USED FOR COMPARATIVE PURPOSES. PAST PERFORMANCE DOES NOT
GUARANTEE OR PREDICT FUTURE RESULTS.
================================================================================
GAM PACIFIC BASIN FUND
1-, 5-, AND 10-YEAR (OR LIFE-OF-CLASS) AVERAGE ANNUAL TOTAL RETURN FOR ALL
RELEVANT SHARE CLASSES PLUS A COMPARISON TO THE MSCI PACIFIC INDEX AS OF
DECEMBER 31, 1999
CLASS 1 YEAR 5 YEAR 10 YEAR
(INCEPTION DATE) (OR LIFE-OF-CLASS)
A SHARES 74.91% 4.12% 7.81%
(MAY 6, 1987)
B SHARES 67.89% NA 37.98%*
(MAY 26, 1998)
C SHARES 63.15% NA 32.89%*
(JUNE 1, 1998)
D SHARES 73.71% NA 3.77%*
(OCTOBER 18, 1995)
MSCI PACIFIC INDEX** 57.96% 2.70% 0.52%
** Returns of MSCI Pacific Index were for the Life-of-Class B: 38.51%; C: 43.61%
and D: 4.38%.
** The MSCI Pacific Index is an unmanaged index of securities listed on the
stock exchanges of Australia, Hong Kong, Japan, New Zealand and
Singapore/Malaysia and includes reinvestment of dividends. Investors may not
purchase indices directly.
12
----
FOR MORE INFORMATION PLEASE CALL 800-426-4685
<PAGE>
FUND INVESTORS PAY VARIOUS EXPENSES EITHER DIRECTLY OR INDIRECTLY. THE TABLE
ABOVE SHOWS THE EXPENSES FOR THE PAST YEAR, ADJUSTED TO REFLECT ANY CHARGES.
ACTUAL OR FUTURE EXPENSES MAY BE DIFFERENT.
FEES AND EXPENSES OF THE FUND
GAM PACIFIC BASIN FUND INVESTOR EXPENSES
SHAREHOLDER TRANSACTION EXPENSES
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C CLASS D
<S> <C> <C> <C> <C>
SALES CHARGES (paid directly from your investment)
Maximum Sales Charge 5.00% 0.00% 0.00% 3.50%
Maximum Deferred Sales Charge 0.00%* 5.00% 1.00% 0.00%
ANNUAL FUND OPERATING EXPENSES (% of net assets)
Management Fees
(after expense reimbursal) 1.00% 1.00% 1.00% 1.00%
Distribution (12b-1) Fees 0.30% 1.00% 1.00% 0.50%
Other Expenses 0.96% 1.48% 3.57% 1.39%
TOTAL FUND OPERATING EXPENSES 2.26% 3.48% 5.57% 2.89%
</TABLE>
* Except for investments of $1 million or more. See "Information about
contingent deferred sales charge."
THESE EXAMPLES CAN HELP YOU COMPARE THE COST OF INVESTING IN THE FUND WITH THE
COST OF INVESTING IN OTHER MUTUAL FUNDS. THE EXAMPLES ASSUME A 5% RETURN EACH
YEAR, WITH OPERATING EXPENSES STAYING THE SAME. YOUR ACTUAL RETURNS AND EXPENSES
MAY BE DIFFERENT.
EXAMPLE #1 ASSUMES YOU INVEST $10,000 IN THE FUND FOR THE PERIODS SHOWN, THEN
REDEEM ALL YOUR SHARES AT THE END OF THOSE PERIODS.
EXAMPLE #2 ASSUMES YOU INVEST $10,000 IN THE FUND FOR THE PERIODS SHOWN, BUT YOU
DO NOT REDEEM YOUR SHARES AT THE END OF THOSE PERIODS.
EXAMPLES
EXPENSES OF HYPOTHETICAL $10,000 INVESTMENT
IN GAM PACIFIC BASIN FUND
CLASS A CLASS B* CLASS C CLASS D
EXAMPLE #1
For one year 718 851 655 632
For three years 1,171 1,368 1,657 1,213
For five years 1,650 2,007 2,746 1,820
For ten years 2,965 3,483 5,414 3,451
EXAMPLE #2
For one year 718 351 555 632
For three years 1,171 1,068 1,657 1,213
For five years 1,650 1,807 2,746 1,820
For ten years 2,965 3,483 5,414 3,451
* Class B converts to Class A at end of Year 8.
13
----
GAM FUNDS INC PROSPECTUS / RISK AND RETURN SUMMARY
<PAGE>
GAM JAPAN CAPITAL FUND
INVESTMENT OBJECTIVE
The Fund seeks long-term capital appreciation. Upon written notice to
shareholders, the Fund's investment objective may be changed without a vote of
shareholders.
INVESTMENT STRATEGY
The Fund invests primarily in common stocks of companies in Japan. The Fund will
not acquire more than 10% of the outstanding voting securities of any one
issuer. No more than 25% of the Fund's total assets will be invested in any one
industry.
In addition, if the investment advisor determines that the long-term capital
appreciation of bonds may equal or exceed the return on stocks, then the Fund
may invest substantially in bonds issued either by governments or government
agencies or corporations. The Fund may not invest more than 5% of assets in
bonds rated lower than investment grade.
In selecting investments for the Fund, the investment advisor looks first at the
economic environment and will attempt to exclude sectors and stocks viewed as
over-valued. Within those area identified for investment, the investment advisor
employs a fundamental investment process focusing on factors such as:
o Experience and shareholder focus of company management
o Financial health including the strength of the balance sheet, cash flow,
earnings quality and long-term growth
o Competitive position within the industry
o Price of the stock compared to forecasted growth rate
o Liquidity as measured by market capitalization, daily trading volume, etc.
Stocks selected tend to have higher return on equity, higher growth in earnings
per share and higher growth in book value per share than the benchmark index.
Sales are triggered by an assessment that the stock is no longer a good value or
that fundamental prospects have deteriorated.
The Fund, for temporary defensive purposes, may invest in short-term bonds of
foreign and United States companies, foreign governments, the U.S. government
and its agencies and instrumentalities as well as money market instruments
denominated in U.S. dollars or a foreign currency. At no point will more than
35% of the Fund's portfolio be held in cash or cash equivalents, except when the
Fund is taking temporary defensive measures.
The Fund may from time to time utilize certain sophisticated investment
techniques, including derivatives. Derivatives are financial instruments which
derive their value from the performance of an underlying asset--another
security, a commodity, or an index. Examples of these include:
o FORWARD FOREIGN EXCHANGE CONTRACTS When a Fund buys a foreign security, it
generally does so in a foreign currency. That currency has a price, and that
price fluctuates. In order to reduce the risk of currency price swings or for
other purposes, the Fund may buy forward foreign exchange contracts on
foreign currencies. These contracts "lock in" a price for the currency at a
certain future date. The Fund may also use put and call options on foreign
currencies.
o OPTIONS AND WARRANTS An option is a contract giving the owner the right to
buy ("call option") or sell ("put option") a security at a designated price
("strike price") on a certain date. A warrant is the equivalent of a call
option written by the issuer of the underlying security.
o FUTURES CONTRACTS Futures contracts obligate one party to deliver and the
other party to purchase a specific quantity of a commodity or a financial
instrument at a designated future date, time and place. Stock index futures
contracts call for a cash payment based on the increase or decrease in the
value of an index.
PRINCIPAL RISKS
You could lose all or a portion of your investment in the Fund. Stock and bond
prices fluctuate in response to many factors including interest rates, general
economic conditions, investor perceptions and market liquidity. Investing in
foreign securities generally involve greater risk than investing in U.S.
securities. Since the Fund
14
----
FOR MORE INFORMATION PLEASE CALL 800-426-4685
<PAGE>
================================================================================
invests principally in Japan, it will be impacted by national events there to a
greater extent than a more broadly diversified fund. Foreign securities prices
may vary more widely than those of U.S. securities because of economic,
financial, political or social factors including:
o POLITICAL CONDITIONS Government regulation or action may adversely affect
foreign markets through the imposition of capital controls, the
nationalization of companies or industries, excessive taxes, etc.
o INFORMATION There is likely to be less available information about foreign
securities than is available about U.S. companies. Foreign companies may not
be subject to the same accounting standards as U.S. companies. Foreign
issuers may be subject to less stringent government supervision or regulation
of financial markets and business practices than U.S. issuers.
o LIQUIDITY Non-U.S. securities may trade on small exchanges less well
regulated than U.S. exchanges, may be more difficult to buy or sell on a
particular day and may be more volatile than U.S. securities.
o COMMISSIONS AND FEES Brokerage fees and commissions are generally higher
abroad than in the U.S.
o EMERGING MARKETS Countries in emerging markets may have relatively unstable
governments, economies based on only a few industries, and securities markets
that trade a small number of issues.
o CURRENCY Fluctuations in currencies, local withholding and other taxes may
adversely impact the price of the Fund's investment.
Derivative instruments involve substantial risk, because a relatively small
change in the security or index underlying a derivative can produce a
disproportionately large profit or loss. The Fund may gain or lose more than its
initial investment. If the Fund has a derivative investment which begins to
deteriorate, there may be no way to sell it and avoid further losses, because no
buyer may be available. In addition, the securities underlying some derivatives
may be illiquid. The Fund may be forced to hold a position until exercise or
expiration, which could result in losses. Hedging, by its nature, involves
predicting the probable direction of price movements; if the Fund predicts
incorrectly, it could lose money--more than if it had not hedged at all. Hedging
cannot eliminate fluctuations in the prices of foreign securities, and there is
no assurance that such hedging attempts will be successful.
The Fund may enter into foreign currency forward contracts, repurchase
agreements, ARINs, and certain other types of futures, options and derivatives
with banks, brokerage firms and other investors in over-the-counter markets, not
through any exchange. The Fund may experience losses or delays if a counterparty
to any such contract defaults or goes into bankruptcy.
An investment in the Fund is not a deposit of a bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency.
WHO MAY WANT TO INVEST?
The Fund may best suit those investors who want long-term capital appreciation,
and who can tolerate the risks involved with stock and foreign investing.
15
----
GAM FUNDS INC PROSPECTUS / RISK AND RETURN SUMMARY
<PAGE>
GAM JAPAN CAPITAL FUND
PAST PERFORMANCE AND EXPENSES
A BAR DISPLAYS THE ANNUAL RETURN OF THE FUND FOR EACH YEAR. THIS ILLUSTRATES THE
VARIABILITY OF THE PERFORMANCE FROM YEAR TO YEAR. FUND PERFORMANCE SHOWN DOES
NOT REFLECT CLASS A SALES CHARGES, BUT INCLUDES THE REINVESTMENT OF DIVIDENDS
AND CAPITAL GAINS. PERFORMANCE WOULD BE LOWER IF SALES CHARGES WERE INCLUDED.
PAST PERFORMANCE DOES NOT GUARANTEE OR PREDICT FUTURE RESULTS.
GAM JAPAN CAPITAL FUND
CLASS A SHARE ANNUAL TOTAL RETURNS
AS OF DECEMBER 31
94 -0.0377
95 0.0645
96 0.0015
97 -0.0258
98 -0.0275
99 0.8705
================================================================================
HIGHEST AND LOWEST RETURNS
Highest Performing Quarter 21.68% in 4th quarter of 1999
Lowest Performing Quarter -10.91% in 1st quarter of 1995
FUND PERFORMANCE SHOWN DOES NOT REFLECT SALES CHARGES. THE TOKYO STOCK EXCHANGE
INDEX IS A MARKET INDEX USED FOR COMPARATIVE PURPOSES. PAST PERFORMANCE DOES NOT
GUARANTEE OR PREDICT FUTURE RESULTS.
================================================================================
GAM JAPAN CAPITAL FUND 1- AND 3-YEAR (OR LIFE-OF-CLASS) AVERAGE ANNUAL TOTAL
RETURN FOR ALL RELEVANT SHARE CLASSES PLUS A COMPARISON TO THE TOKYO STOCK
EXCHANGE AS OF DECEMBER 31, 1999
CLASS 1 YEAR 5 YEAR LIFE-OF CLASS
(INCEPTION DATE)
A SHARES 87.05% 13.57% 11.48%
(JULY 1, 1994)
B SHARES 82.18% N/A 41.41%*
(MAY 26, 1998)
C SHARES 83.30% N/A 40.76%*
(MAY 19, 1998)
TOKYO STOCK EXCHANGE INDEX** 75.89% 2.34% 0.81%
* Returns of Tokyo Stock Exchange Index (TOPIX) were for the Life-of-Class B:
49.91% and C: 48.90%.
** The Index (TOPIX) is an unmanaged composite index of companies listed on the
First Section of the Tokyo Stock Exchange and includes reinvestment of
dividends. Investors may not purchase indices directly.
16
----
FOR MORE INFORMATION PLEASE CALL 800-426-4685
<PAGE>
FUND INVESTORS PAY VARIOUS EXPENSES EITHER DIRECTLY OR INDIRECTLY. THIS TABLE
SHOWS THE EXPENSES FOR THE PAST YEAR, ADJUSTED TO REFLECT ANY CHARGES. ACTUAL OR
FUTURE EXPENSES MAY BE DIFFERENT.
================================================================================
FEES AND EXPENSES OF THE FUND
GAM JAPAN CAPITAL FUND INVESTOR EXPENSES
SHAREHOLDER TRANSACTION EXPENSES
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
<S> <C> <C> <C>
SALES CHARGES (paid directly from your investment)
Maximum Sales Charge 5.00% 0.00% 0.00%
Maximum Deferred Sales Charge 0.00%* 5.00% 1.00%
ANNUAL FUND OPERATING EXPENSES (% of net assets)
Management Fees
(after expense reimbursal) 1.00% 1.00% 1.00%
Distribution (12b-1) Fees 0.30% 1.00% 1.00%
Other Expenses 0.76% 1.80% 1.94%
TOTAL FUND OPERATING EXPENSES 2.06% 3.80% 3.94%
</TABLE>
THESE EXAMPLES CAN HELP YOU COMPARE THE COST OF INVESTING IN THE FUND WITH THE
COST OF INVESTING IN OTHER MUTUAL FUNDS. THE EXAMPLES ASSUME A 5% RETURN EACH
YEAR, WITH OPERATING EXPENSES STAYING THE SAME. YOUR ACTUAL RETURNS AND EXPENSES
MAY BE DIFFERENT.
EXAMPLE #1 ASSUMES YOU INVEST $10,000 IN THE FUND FOR THE PERIODS SHOWN, THEN
REDEEM ALL YOUR SHARES AT THE END OF THOSE PERIODS.
EXAMPLE #2 ASSUMES YOU INVEST $10,000 IN THE FUND FOR THE PERIODS SHOWN, BUT YOU
DO NOT REDEEM YOUR SHARES AT THE END OF THOSE PERIODS.
EXAMPLES
EXPENSES OF HYPOTHETICAL $10,000 INVESTMENT
IN GAM JAPAN CAPITAL FUND
CLASS A CLASS B* CLASS C
EXAMPLE #1
For one year 699 882 496
For three years 1,113 1,461 1,201
For five years 1,553 2,158 2,023
For ten years 2,770 3,656 4,155
EXAMPLE #2
For one year 699 382 396
For three years 1,113 1,161 1,201
For five years 1,553 1,958 2,023
For ten years 2,770 3,656 4,155
* Class B converts to Class A at end of year 8.
17
----
GAM FUNDS INC PROSPECTUS / RISK AND RETURN SUMMARY
<PAGE>
================================================================================
GAM EUROPE FUND
INVESTMENT OBJECTIVE
The Fund seeks long-term capital appreciation. Upon written notice to
shareholders, the Fund's investment objective may be changed without a vote of
shareholders.
INVESTMENT STRATEGY
The Fund invests primarily in common stocks of companies in Europe including the
United Kingdom, Ireland, France, Germany, the Netherlands, Denmark, Norway,
Sweden, Finland, Iceland, Switzerland, Austria, Belgium, Spain, Portugal, Italy,
Greece, Hungary, Poland, the Czech Republic and Slovakia. Under normal market
conditions, the Fund will invest in stocks issued in at least three different
countries. The Fund will not acquire more than 10% of the outstanding voting
securities of any one issuer. No more than 25% of the Fund's total assets will
be invested in any one industry.
In addition, if the investment advisor determines that the long-term capital
appreciation of bonds may equal or exceed the return on stocks, then the Fund
may invest substantially in bonds issued either by governments or government
agencies or corporations. The Fund may not invest more than 5% of assets in
bonds rated lower than investment grade.
The investment advisor combines top-down and bottom-up analysis. Country and
sector allocation are integrated into the process, but stock selection is the
primary factor influencing Fund composition. Stocks are evaluated relative to
its peer group, its earnings history and its growth potential. Company visits
are an important part of the selection process. Stocks selected tend to have the
following characteristics:
o Strong business with a leadership position in their field
o Attractive valuations
o Good quality management
Small and medium cap stocks will be included in the Fund, where the investment
advisor feels prospects and valuations justify such exposure. Sales are
triggered by an assessment that the stock is no longer a good value or that
fundamental prospects have deteriorated.
The Fund, for temporary defensive purposes, may invest in short-term bonds of
foreign and United States companies, foreign governments, the U.S. government
and its agencies and instrumentalities as well as money market instruments
denominated in U.S. dollars or a foreign currency. At no point will more than
35% of the Fund's portfolio be held in cash or cash equivalents, except when the
Fund is taking temporary defensive measures.
The Fund may from time to time utilize certain sophisticated investment
techniques, including derivatives. Derivatives are financial instruments which
derive their value from the performance of an underlying asset--another
security, a commodity, or an index. Examples of these include:
o FORWARD FOREIGN EXCHANGE CONTRACTS When a Fund buys a foreign security, it
generally does so in a foreign currency. That currency has a price, and that
price fluctuates. In order to reduce the risk of currency price swings or for
other purposes, the Fund may buy forward foreign exchange contracts on
foreign currencies. These contracts "lock in" a price for the currency at a
certain future date. The Fund may also use put and call options on foreign
currencies.
o OPTIONS AND WARRANTS An option is a contract giving the owner the right to
buy ("call option") or sell ("put option") a security at a designated price
("strike price") on a certain date. A warrant is the equivalent of a call
option written by the issuer of the underlying security.
o FUTURES CONTRACTS Futures contracts obligate one party to deliver and the
other party to purchase a specific quantity of a commodity or a financial
instrument at a designated future date, time and place. Stock index futures
contracts call for a cash payment based on the increase or decrease in the
value of an index.
PRINCIPAL RISKS
You could lose all or a portion of your investment in the Fund. Stock and bond
prices fluctuate in response to many factors including interest rates, general
economic conditions, investor perceptions and market liquidity. Investing in
foreign securities generally involve greater risk than investing in U.S.
securities. Since the Fund
18
----
FOR MORE INFORMATION PLEASE CALL 800-426-4685
<PAGE>
================================================================================
invests principally in Europe, it will be impacted by regional events there to a
greater extent than a more broadly diversified fund. Foreign securities prices
may vary more widely than those of U.S. securities because of economic,
financial, political or social factors including:
o POLITICAL CONDITIONS Government regulation or action may adversely affect
foreign markets through the imposition of capital controls, the
nationalization of companies or industries, excessive taxes, etc.
o INFORMATION There is likely to be less available information about foreign
securities than is available about U.S. companies. Foreign companies may not
be subject to the same accounting standards as U.S. companies. Foreign
issuers may be subject to less stringent government supervision or regulation
of financial markets and business practices than U.S. issuers.
o LIQUIDITY Non-U.S. securities may trade on small exchanges less well
regulated than U.S. exchanges, may be more difficult to buy or sell on a
particular day and may be more volatile than U.S. securities.
o COMMISSIONS AND FEES Brokerage fees and commissions are generally higher
abroad than in the U.S.
o EMERGING MARKETS Countries in emerging markets may have relatively unstable
governments, economies based on only a few industries, and securities markets
that trade a small number of issues.
o CURRENCY Fluctuations in currencies, local withholding and other taxes may
adversely impact the price of the Fund's investment.
Derivative instruments involve substantial risk, because a relatively small
change in the security or index underlying a derivative can produce a
disproportionately large profit or loss. The Fund may gain or lose more than its
initial investment. If the Fund has a derivative investment which begins to
deteriorate, there may be no way to sell it and avoid further losses, because no
buyer may be available. In addition, the securities underlying some derivatives
may be illiquid. The Fund may be forced to hold a position until exercise or
expiration, which could result in losses. Hedging, by its nature, involves
predicting the probable direction of price movements; if the Fund predicts
incorrectly, it could lose money--more than if it had not hedged at all. Hedging
cannot eliminate fluctuations in the prices of foreign securities, and there is
no assurance that such hedging attempts will be successful.
The Fund may enter into foreign currency forward contracts, repurchase
agreements, ARINs, and certain other types of futures, options and derivatives
with banks, brokerage firms and other investors in over-the-counter markets, not
through any exchange. The Fund may experience losses or delays if a counterparty
to any such contract defaults or goes into bankruptcy.
An investment in the Fund is not a deposit of a bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency.
WHO MAY WANT TO INVEST?
The Fund may best suit those investors who want long-term capital appreciation,
and who can tolerate the risks involved with stock and foreign investing.
19
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GAM FUNDS INC PROSPECTUS / RISK AND RETURN SUMMARY
<PAGE>
GAM EUROPE FUND
PAST PERFORMANCE AND EXPENSES
A BAR DISPLAYS THE ANNUAL RETURN OF THE FUND FOR EACH YEAR. THIS ILLUSTRATES THE
VARIABILITY OF THE PERFORMANCE FROM YEAR TO YEAR. FUND PERFORMANCE SHOWN DOES
NOT REFLECT CLASS A SALES CHARGES, BUT INCLUDES THE REINVESTMENT OF DIVIDENDS
AND CAPITAL GAINS. PERFORMANCE WOULD BE LOWER IF SALES CHARGES WERE INCLUDED.
PAST PERFORMANCE DOES NOT GUARANTEE OR PREDICT FUTURE RESULTS.
GAM EUROPE FUND
CLASS A SHARE ANNUAL TOTAL RETURNS
AS OF DECEMBER 31
90 -0.1607
91 -0.007
92 -0.0491
93 0.2268
94 -0.0311
95 0.1677
96 0.2132
97 0.2755
98 0.107
99 0.1621
================================================================================
HIGHEST AND LOWEST RETURNS
Highest Performing Quarter 27.94% in 4th quarter of 1999
Lowest Performing Quarter -17.45% in 3rd quarter of 1998
FUND PERFORMANCE SHOWN DOES NOT REFLECT SALES CHARGES. THE MSCI EUROPE INDEX IS
A BROAD MARKET INDEX USED FOR COMPARATIVE PURPOSES. PAST PERFORMANCE DOES NOT
GUARANTEE OR PREDICT FUTURE RESULTS.
================================================================================
GAM EUROPE FUND
1- AND 5-YEAR (OR LIFE-OF-CLASS) AVERAGE ANNUAL TOTAL RETURN FOR ALL RELEVANT
SHARE CLASSES PLUS A COMPARISON TO THE MSCI EUROPE INDEX AS OF DECEMBER 31,
1999
CLASS 1 YEAR 5 YEAR LIFE-OF-CLASS
(INCEPTION DATE)
A SHARES 16.21% 18.37% 8.15%
(JANUARY 1, 1990)
B SHARES 14.48% N/A 2.02%*
(MAY 26, 1998)
C SHARES 13.11% N/A 1.58%*
(MAY 20, 1998)
MSCI EUROPE INDEX** 16.23% 22.54% 14.54%
* Returns of MSCI Europe Index were for the Life-of-Class B: 10.08% and
C: 11.30%.
** The MSCI Europe Index is an unmanaged index of securities listed on the stock
exchanges of 15 European countries and includes reinvestment of dividends.
Investors may not purchase indices directly.
20
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FOR MORE INFORMATION PLEASE CALL 800-426-4685
<PAGE>
FUND INVESTORS PAY VARIOUS EXPENSES EITHER DIRECTLY OR INDIRECTLY. THIS TABLE
SHOWS THE EXPENSES FOR THE PAST YEAR, ADJUSTED TO REFLECT ANY CHARGES. ACTUAL OR
FUTURE EXPENSES MAY BE DIFFERENT.
================================================================================
FEES AND EXPENSES OF THE FUND
GAM EUROPE FUND INVESTOR EXPENSES
SHAREHOLDER TRANSACTION EXPENSES
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
<S> <C> <C> <C>
SALES CHARGES (paid directly from your investment)
Maximum Sales Charge 5.00% 0.00% 0.00%
Maximum Deferred Sales Charge 0.00%* 5.00% 1.00%
ANNUAL FUND OPERATING EXPENSES (% of net assets)
Management Fees
(after expense reimbursal) 1.00% 1.00% 1.00%
Distribution (12b-1) Fees 0.30% 1.00% 1.00%
Other Expenses 1.18% 2.17% 3.35%
TOTAL FUND OPERATING EXPENSES 2.48% 4.17% 5.35%
</TABLE>
* Except for investments of $1 million or more. See "Information about
contingent deferred sales charge."
THESE EXAMPLES CAN HELP YOU COMPARE THE COST OF INVESTING IN THE FUND WITH THE
COST OF INVESTING IN OTHER MUTUAL FUNDS. THE EXAMPLES ASSUME A 5% RETURN EACH
YEAR, WITH OPERATING EXPENSES STAYING THE SAME. YOUR ACTUAL RETURNS AND EXPENSES
MAY BE DIFFERENT.
EXAMPLE #1 ASSUMES YOU INVEST $10,000 IN THE FUND FOR THE PERIODS SHOWN, THEN
REDEEM ALL YOUR SHARES AT THE END OF THOSE PERIODS.
EXAMPLE #2 ASSUMES YOU INVEST $10,000 IN THE FUND FOR THE PERIODS SHOWN, BUT YOU
DO NOT REDEEM YOUR SHARES AT THE END OF THOSE PERIODS.
EXAMPLES
EXPENSES OF HYPOTHETICAL $10,000 INVESTMENT
IN GAM EUROPE FUND
CLASS A CLASS B* CLASS C
EXAMPLE #1
For one year 739 919 634
For three years 1,234 1,567 1,597
For five years 1,755 2,329 2,652
For ten years 3,175 3,992 5,257
EXAMPLE #2
For one year 739 419 534
For three years 1,234 1,267 1,597
For five years 1,755 2,129 2,652
For ten years 3,175 3,992 5,257
* Class B converts to Class A at the end of year 8.
21
----
GAM FUNDS INC PROSPECTUS / RISK AND RETURN SUMMARY
<PAGE>
================================================================================
GAM NORTH AMERICA FUND
INVESTMENT OBJECTIVE
The Fund seeks long-term capital appreciation. Upon written notice to
shareholders, the Fund's investment objective may be changed without a vote of
shareholders.
INVESTMENT STRATEGY
The Fund invests primarily in common stocks of companies in the United States
and Canada. The Fund will not acquire more than 10% of the outstanding voting
securities of any one issuer. No more than 25% of the Fund's total assets will
be invested in any one industry.
In addition, if the investment advisor determines that the long-term capital
appreciation of bonds may equal or exceed the return on stocks, then the Fund
may invest substantially in bonds issued either by governments or government
agencies or corporations. The Fund may not invest more than 5% of assets in
bonds rated lower than investment grade.
The investment advisor has a fundamentally based "growth" approach to investment
management, with an emphasis on identifying long term industries and industry
trends which will produce a growing stream of dividends ahead of inflation.
Typically the Fund is comprised of large capitalization, U.S. domiciled
companies with, on average, approximately 40 per cent of earnings from non-U.S.
sources. The investment advisor attempts to identify companies which are
globally dominant in their industry sectors and have access to growing market
share and to capital on a worldwide basis. Stocks are evaluated on factors such
as:
o The financial condition of the company
o Estimated earnings growth rates
o Pattern of consistent dividend payments
o Anticipated dividend growth rates
Generally, the maximum weighting in the Fund per company will be approximately
7%. Sales are triggered by an assessment that the stock is no longer a good
value or that fundamental prospects have deteriorated.
The Fund, for temporary defensive purposes, may invest in short-term bonds of
foreign and United States companies, foreign governments, the U.S. government
and its agencies and instrumentalities as well as money market instruments
denominated in U.S. dollars or a foreign currency. At no point will more than
35% of the Fund's portfolio be held in cash or cash equivalents, except when the
Fund is taking temporary defensive measures.
PRINCIPAL RISKS
You could lose all or a portion of your investment in the Fund. Stock prices
fluctuate based on such things as the business performance of the company,
investors' perception about the company or general economic conditions. Other
factors influencing the price of stocks include:
ECONOMIC CONDITIONS The broad investment environment in the U.S. or
international markets could impact stock prices based on interest rates,
politics, fiscal policy and other current events.
INFLATION Rising prices of goods and services could eliminate any gains realized
from your investment in the Fund.
22
----
FOR MORE INFORMATION PLEASE CALL 800-426-4685
<PAGE>
================================================================================
"GROWTH" INVESTING Growth stocks may carry higher prices than other stocks and
experience greater price fluctuations as the market reacts to the company' s
growth potential and overall economic activity.
An investment in the Fund is not a deposit of a bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency.
WHO MAY WANT TO INVEST?
The Fund may best suit those investors who want long-term capital appreciation,
and who can tolerate the risks involved with stock investing.
23
----
GAM FUNDS INC PROSPECTUS / RISK AND RETURN SUMMARY
<PAGE>
GAM NORTH AMERICA FUND
PAST PERFORMANCE AND EXPENSES
A BAR DISPLAYS THE ANNUAL RETURN OF THE FUND FOR EACH YEAR. THIS ILLUSTRATES THE
VARIABILITY OF THE PERFORMANCE FROM YEAR TO YEAR. FUND PERFORMANCE SHOWN DOES
NOT REFLECT CLASS A SALES CHARGES, BUT INCLUDES THE REINVESTMENT OF DIVIDENDS
AND CAPITAL GAINS. PERFORMANCE WOULD BE LOWER IF SALES CHARGES WERE INCLUDED.
PAST PERFORMANCE DOES NOT GUARANTEE OR PREDICT FUTURE RESULTS.
================================================================================
GAM NORTH AMERICA FUND
CLASS A SHARE ANNUAL TOTAL RETURNS
AS OF DECEMBER 31
90 0.0214
91 0.3069
92 0.0242
93 -0.0209
94 0.0297
95 0.309
96 0.241
97 0.2941
98 0.2944
99 0.0932
================================================================================
HIGHEST AND LOWEST RETURNS
Highest Performing Quarter 18.07% in 4th quarter of 1998
Lowest Performing Quarter -10.1% in 3rd quarter of 1998
FUND PERFORMANCE SHOWN DOES NOT REFLECT SALES CHARGES. THE S&P 500 COMPOSITE
INDEX IS A BROAD MARKET INDEX USED FOR COMPARATIVE PURPOSES. PAST PERFORMANCE
DOES NOT GUARANTEE OR PREDICT FUTURE RESULTS.
================================================================================
GAM NORTH AMERICA FUND
1- AND 5-YEAR (OR LIFE-OF-CLASS) AVERAGE ANNUAL TOTAL RETURN FOR ALL RELEVANT
SHARE CLASSES PLUS A COMPARISON TO THE S&P 500 COMPOSITE INDEX
AS OF DECEMBER 31, 1999
CLASS 1 YEAR 5 YEAR LIFE-OF-CLASS
(INCEPTION DATE)
A SHARES 9.32% 24.36% 15.16%
(JANUARY 1, 1990)
B SHARES 7.82% NA 11.06%*
(MAY 26, 1998)
C SHARES 8.02% NA 5.83%*
(JULY 7, 1998)
S&P 500 COMPOSITE INDEX** 21.04% 28.59% 18.23%
* Returns of S&P Composite Index were for Life-of Class B: 21.97% and
C: 19.30%.
** The S&P Composite Index is an unmanaged index of the stock performance of 500
industrial, transportation, utility and financial companies and includes
reinvestment of dividends. Investors may not purchase indices directly.
24
----
FOR MORE INFORMATION PLEASE CALL 800-426-4685
<PAGE>
FUND INVESTORS PAY VARIOUS EXPENSES EITHER DIRECTLY OR INDIRECTLY. THIS TABLE
SHOWS THE EXPENSES FOR THE PAST YEAR, ADJUSTED TO REFLECT ANY CHARGES. ACTUAL OR
FUTURE EXPENSES MAY BE DIFFERENT.
FEES AND EXPENSES OF THE FUND
================================================================================
GAM NORTH AMERICA FUND INVESTOR EXPENSES
SHAREHOLDER TRANSACTION EXPENSES
CLASS A CLASS B CLASS C
SALES CHARGES (paid directly from your investment)
- --------------------------------------------------------------------------------
Maximum Sales Charge 5.00% 0.00% 0.00%
Maximum Deferred Sales Charge 0.00%* 5.00% 1.00%
ANNUAL FUND OPERATING EXPENSES (% of net assets)
- --------------------------------------------------------------------------------
Management Fees
(after expense reimbursal) 1.00% 1.00% 1.00%
Distribution (12b-1) Fees 0.30% 1.00% 1.00%
Other Expenses 0.60% 1.11% 0.90%
TOTAL FUND OPERATING EXPENSES 1.90% 3.11% 2.90%
* Except for investments of $1 million or more. See "Information about
contingent deferred sales charge."
THESE EXAMPLES CAN HELP YOU COMPARE THE COST OF INVESTING IN THE FUND WITH THE
COST OF INVESTING IN OTHER MUTUAL FUNDS. THE EXAMPLES ASSUME A 5% RETURN EACH
YEAR, WITH OPERATING EXPENSES STAYING THE SAME. YOUR ACTUAL RETURNS AND EXPENSES
MAY BE DIFFERENT.
EXAMPLE #1 ASSUMES YOU INVEST $10,000 IN THE FUND FOR THE PERIODS SHOWN, THEN
REDEEM ALL YOUR SHARES AT THE END OF THOSE PERIODS.
EXAMPLE #2 ASSUMES YOU INVEST $10,000 IN THE FUND FOR THE PERIODS SHOWN, BUT YOU
DO NOT REDEEM YOUR SHARES AT THE END OF THOSE PERIODS.
EXAMPLES
================================================================================
EXPENSES OF HYPOTHETICAL $10,000 INVESTMENT
IN GAM NORTH AMERICA FUND
CLASS A CLASS B CLASS C
EXAMPLE #1
- --------------------------------------------------------------------------------
For one year 683 814 393
For three years 1,067 1,260 898
For five years 1,475 1,830 1,528
For ten years 2,611 3,139 3,223
EXAMPLE #2
- --------------------------------------------------------------------------------
For one year 683 314 293
For three years 1,067 960 898
For five years 1,475 1,630 1,528
For ten years 2,611 3,139 3,223
* Class B converts to Class A at end of year 8.
25
----
GAM FUNDS INC PROSPECTUS / RISK AND RETURN SUMMARY
<PAGE>
================================================================================
GAMerica Capital Fund
INVESTMENT OBJECTIVE
The Fund seeks long-term capital appreciation. Upon written notice to
shareholders, the Fund's investment objective may be changed without a vote of
shareholders.
INVESTMENT STRATEGY
The Fund invests primarily in common stocks of companies in the United States
and Canada. The Fund will not acquire more than 10% of the outstanding voting
securities of any one issuer. No more than 25% of the Fund's total assets will
be invested in any one industry.
In addition, if the investment advisor determines that the long-term capital
appreciation of bonds may equal or exceed the return on stocks, then the Fund
may invest substantially in bonds issued either by governments or government
agencies or corporations. The Fund may not invest more than 5% of assets in
bonds rated lower than investment grade.
The investment advisor uses a research-intensive "value/blend" investing
approach. Value stocks are typically characterized by the following when
compared to the market as a whole:
o Lower price to earnings ratios
o Lower price to book ratios
o Lower price to cash flow ratios and
o Higher dividend yields
Although not restricted to small cap stocks, the investment advisor tends to
find the best value in smaller companies. The Fund is generally concentrated
into a limited number of stocks with top 20 positions representing 80% of the
total Fund. Turnover tends to be low as the investment advisor looks for
companies with limited leverage, strong balance sheets and above all, sound
management. Sales are triggered by an assessment that the stock is no longer a
good value or that fundamental prospects have deteriorated; an increase in
market capitalization alone will not cause the investment advisor to sell. The
investment advisor makes frequent visits to companies to judge their investment
merit.
The Fund, for temporary defensive purposes, may invest in short-term bonds of
foreign and United States companies, foreign governments, the U.S. government
and its agencies and instrumentalities, as well as money market instruments
denominated in U.S. dollars or a foreign currency. At no point will more than
35% of the Fund's portfolio be held in cash or cash equivalents, except when the
Fund is taking temporary defensive measures.
PRINCIPAL RISKS
You could lose all or a portion of your investment in the Fund. Stock prices
fluctuate based on such things as the business performance of the company,
investors' perception about the company or general economic conditions. Small
companies are often new and less well established. They may have limited product
lines, markets or financial resources, and they may depend on one or a few key
persons for management. Other factors influencing the price of stocks include:
ECONOMIC CONDITIONS The broad investment environment in the U.S. or
international markets could impact stock prices based on interest rates,
politics, fiscal policy and other current events.
INFLATION Rising prices of goods and services could eliminate any gains realized
from your investment in the Fund.
26
----
FOR MORE INFORMATION PLEASE CALL 800-426-4685
<PAGE>
================================================================================
"VALUE" INVESTING Value stocks may carry higher risk than other stocks as the
determination that a stock is undervalued is subjective and the stock price may
not rise to what the investment advisor considers full value.
An investment in the Fund is not a deposit of a bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency.
WHO MAY WANT TO INVEST?
The Fund may best suit those investors who want long-term capital appreciation,
and who can tolerate risks involved with stock investing.
27
----
GAM FUNDS INC PROSPECTUS / RISK AND RETURN SUMMARY
<PAGE>
GAMERICA CAPITAL FUND
PAST PERFORMANCE AND EXPENSES
A BAR DISPLAYS THE ANNUAL RETURN OF THE FUND FOR EACH YEAR. THIS ILLUSTRATES THE
VARIABILITY OF THE PERFORMANCE FROM YEAR TO YEAR. FUND PERFORMANCE SHOWN DOES
NOT REFLECT CLASS A SALES CHARGES, BUT INCLUDES THE REINVESTMENT OF DIVIDENDS
AND CAPITAL GAINS. PERFORMANCE WOULD BE LOWER IF SALES CHARGES WERE INCLUDED.
PAST PERFORMANCE DOES NOT GUARANTEE OR PREDICT FUTURE RESULTS.
================================================================================
GAMERICA CAPITAL FUND
CLASS A SHARE ANNUAL TOTAL RETURNS
AS OF DECEMBER 31
95 0.0138
96 0.1831
97 0.3728
98 0.3059
99 0.2897
================================================================================
HIGHEST AND LOWEST RETURNS
Highest Performing Quarter 24.02% in 3rd quarter of 1997
Lowest Performing Quarter -13.28% in 3rd quarter of 1997
FUND PERFORMANCE SHOWN DOES NOT REFLECT SALES CHARGES. THE S&P 500 COMPOSITE
INDEX IS A BROAD MARKET INDEX USED FOR COMPARATIVE PURPOSES. PAST PERFORMANCE
DOES NOT GUARANTEE OR PREDICT FUTURE RESULTS.
================================================================================
GAMERICA CAPITAL FUND
1- AND 3-YEAR (OR LIFE-OF-CLASS) AVERAGE ANNUAL TOTAL RETURN FOR ALL RELEVANT
SHARE CLASSES PLUS A COMPARISON TO THE S&P 500 COMPOSITE INDEX AS OF DECEMBER
31, 1999
CLASS 1 YEAR LIFE-OF-CLASS
(INCEPTION DATE)
A SHARES 28.97% 24.60%
(MAY 12, 1995)
B SHARES 27.68% 20.22%*
(MAY 26, 1998)
C SHARES 27.95% 19.80%*
(MAY 26, 1998)
S&P 500 COMPOSITE INDEX 21.04% 27.10%
* Returns of S&P Composite Index were for Life-of Class B and C: 21.97%.
** The S&P Composite Index is an unmanaged index of the stock performance of 500
industrial, transportation, utility and financial companies and includes
reinvestment of dividends. Investors may not purchase indices directly.
28
----
FOR MORE INFORMATION PLEASE CALL 800-426-4685
<PAGE>
FUND INVESTORS PAY VARIOUS EXPENSES EITHER DIRECTLY OR INDIRECTLY. THIS TABLE
SHOWS THE EXPENSES FOR THE PAST YEAR, ADJUSTED TO REFLECT ANY CHARGES. ACTUAL
OR FUTURE EXPENSES MAY BE DIFFERENT.
<TABLE>
<CAPTION>
FEES AND EXPENSES OF THE FUND
==========================================================================================
GAMERICA CAPITAL FUND INVESTOR EXPENSES
SHAREHOLDER TRANSACTION EXPENSES
CLASS A CLASS B CLASS C
SALES CHARGES (paid directly from your investment)
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Maximum Sales Charge 5.00% 0.00% 0.00%
Maximum Deferred Sales Charge 0.00%* 5.00% 1.00%
ANNUAL FUND OPERATING EXPENSES (% of net assets)
- ------------------------------------------------------------------------------------------
Management Fees
(after expense reimbursal) 1.00% 1.00% 1.00%
Distribution (12b-1) Fees 0.30% 1.00% 1.00%
Other Expenses 0.54% 0.88% 0.74%
TOTAL FUND OPERATING EXPENSES 1.84% 2.88% 2.74%
</TABLE>
* Except for investments of $1 million or more. See "Information about
contingent deferred sales charge."
THESE EXAMPLES CAN HELP YOU COMPARE THE COST OF INVESTING IN THE FUND WITH THE
COST OF INVESTING IN OTHER MUTUAL FUNDS. THE EXAMPLES ASSUME A 5% RETURN EACH
YEAR, WITH OPERATING EXPENSES STAYING THE SAME. YOUR ACTUAL RETURNS AND EXPENSES
MAY BE DIFFERENT.
EXAMPLE #1 ASSUMES YOU INVEST $10,000 IN THE FUND FOR THE PERIODS SHOWN, THEN
REDEEM ALL YOUR SHARES AT THE END OF THOSE PERIODS.
EXAMPLE #2 ASSUMES YOU INVEST $10,000 IN THE FUND FOR THE PERIODS SHOWN, BUT YOU
DO NOT REDEEM YOUR SHARES AT THE END OF THOSE PERIODS.
EXAMPLES
================================================================================
EXPENSES OF HYPOTHETICAL $10,000 INVESTMENT
IN GAMERICA CAPITAL FUND
CLASS A CLASS B* CLASS C
EXAMPLE #1
- --------------------------------------------------------------------------------
For one year 678 791 377
For three years 1,050 1,192 850
For five years 1,446 1,718 1,450
For ten years 2,551 2,958 3,070
EXAMPLE #2
- --------------------------------------------------------------------------------
For one year 678 291 277
For three years 1,050 892 850
For five years 1,446 1,518 1,450
For ten years 2,551 2,958 3,070
* Class B converts to Class A at end of year 8.
29
----
GAM FUNDS INC PROSPECTUS / RISK AND RETURN SUMMARY
<PAGE>
II. MANAGEMENT OF THE FUNDS
================================================================================
INVESTMENT ADVISERS
GAM International Management Limited ("GIML"), a corporation organized in 1984
under the laws of the United Kingdom, 12 St. James's Place, London SW1A 1NX
England, serves as Investment Advisor for each Fund. GIML manages the assets of
all of the Funds except GAM North America Fund.
Global Asset Management Limited ("GAML"), the ultimate shareholder of GIML, is
wholly owned by UBS AG ("UBS"), a Swiss banking corporation. UBS, with
headquarters in Switzerland, is an internationally diversified organization with
operations in many aspects of the financial services industry. UBS was formed by
the merger of Union Bank of Switzerland and Swiss Bank Corporation in June 1998.
Fayez Sarofim & Co. ("Sarofim"), a Texas corporation organized in 1958, Two
Houston Center, Houston, TX 77010, serves as Co-Investment Advisor for GAM North
America Fund and manages its assets.
As compensation for its services, each Fund, except GAM North America Fund, pays
GIML the equivalent of 1.0% per annum of the Fund's average daily net assets.
GAM North America Fund pays a fee equal to 0.5% of its average daily net assets
to GIML and 0.5% of its average daily net assets to Sarofim.
The Funds' expense ratios may be higher than those of most registered investment
companies. This reflects the higher costs of foreign investing. The advisory fee
paid by each Fund is higher than that of most registered investment companies.
The Funds pay for all expenses of their operations.
INDIVIDUALS PRIMARILY RESPONSIBLE FOR
DAY-TO-DAY MANAGEMENT OF THE FUNDS:
GAM GLOBAL AND GAM INTERNATIONAL FUNDS
JEAN-PHILIPPE CREMERS, Investment Director, joined Global Asset Management as an
analyst for the International Team in April, 1992. He has been an Investment
Director with the International Team since 1997 and is responsible for a number
of Global Asset Management's other global and international funds. Prior to
joining Global Asset Management, Mr. Cremers analyzed the Japanese and U.S.
stock markets at the Tokyo Investment Information Centre in Hong Kong. Mr.
Cremers is based in London.
GAM PACIFIC BASIN FUND MICHAEL S. BUNKER, Investment Director, has overall
responsibility for Asian investment policy. Mr. Bunker has more than 20 years'
investment experience, primarily in Asian markets. He started managing GAM
Pacific Basin Fund on May 6, 1987, and also manages the offshore fund, GAM
Pacific Inc. Mr. Bunker is based in London.
GAM JAPAN CAPITAL FUND PAUL S. KIRKBY, Investment Director, is responsible for
investments in the Japanese market. He joined Global Asset Management in 1985 as
a Senior Fund Manager in Hong Kong; before that, he was an analyst with New
Japan Securities Co. Ltd., Tokyo. Mr. Kirkby started managing GAM Japan Capital
Fund on July 1, 1994, and also manages the offshore fund GAM Japan Inc. Mr.
Kirkby is based in London.
GAM EUROPE FUND JOHN BENNETT, Investment Director, is responsible for European
markets. He joined Global Asset Management in 1993; before that, he was Senior
Fund Manager, Ivory & Sime, responsible for Continental European equity
portfolios. Mr. Bennett started managing GAM Europe Fund on January 1, 1993, and
also manages the offshore fund GAM Pan European Inc. Mr. Bennett is based in
London.
GAM NORTH AMERICA FUND FAYEZ SAROFIM, Founder (1958), President and Chairman of
the Board and managing shareholder of Fayez Sarofim & Co., which serves as
co-investment advisor of GAM North America. He started managing GAM North
America Fund on June 29, 1990, and also manages the offshore fund GAM US Inc.
Fayez Sarofim & Co. currently manages aggregate assets of approximately $47
billion under the supervision of Mr. Sarofim.
GAMERICA CAPITAL FUND GORDON GRENDER, Director, has been associated with Global
Asset Management since 1983. He has managed North American stock funds since
1974. Mr. Grender started managing GAMerica Capital Fund on May 12, 1995, and
also manages GAMerica Inc., an offshore fund with similar investment objectives.
Mr. Grender is based in London.
30
----
FOR MORE INFORMATION PLEASE CALL 800-426-4685
<PAGE>
================================================================================
DISTRIBUTOR
GAM Services Inc., 135 East 57th Street, New York, NY 10022, an affiliate of
GIML, serves as distributor and principal underwriter of the Funds' shares. GIML
is an indirect wholly owned subsidiary of GAML. GAML is wholly owned by UBS. GAM
Services compensates financial services firms which sell shares of the Funds
pursuant to agreements with GAM Services. Compensation payments come from sales
charges paid by shareholders at the time of purchase (for Class A and D shares),
from GAM Services resources (for Class B and C shares) and from 12b-1 fees paid
out of Fund assets.
Each Fund has adopted a Distribution Plan under Rule 12b-1 to pay for
distribution and sale of its shares. Under this Plan, Class A, Class B, Class C
and Class D shares pay 12b-1 fees. Please see "Sales Charge Schedules" on page
35 for details.
In the case of Class A, B, C and D share accounts which are not assigned to a
financial services firm, GAM Services retains the entire fee. Should the fees
collected under the Plans exceed the expenses of GAM Services in any year, GAM
Services would realize a profit.
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:
o Processing purchase and redemption transactions.
o Transmitting and receiving monies for the purchase and sale of shares in the
Funds.
o Answering routine inquires about the Funds.
o Furnishing monthly and year-end statements and confirmations of purchases and
sales of shares.
o Transmitting periodic reports, updated prospectuses, proxy statements and
other shareholder communications.
For these services, each Fund pays fees which may vary depending on the services
provided. Fees will not exceed an annual rate of 0.25% of the net daily asset
value of the shares of a Fund under the service contract.
31
----
GAM FUNDS INC PROSPECTUS / RISK AND RETURN SUMMARY
<PAGE>
III. Shareholder Information
================================================================================
CHOOSING THE APPROPRIATE SHARE CLASS
When you buy, sell, or exchange shares of a Fund, you do so at the Fund's net
asset value (NAV), plus any applicable sales charge or Contingent Deferred Sales
Charge (CDSC). NAV is determined by dividing the value of a Fund's securities,
cash, and other assets (including accrued interest), minus all liabilities
(including accrued expenses), by the number of the Fund's shares outstanding.
The Funds (except GAM Japan Capital Fund) calculate their NAVs at the close of
regular trading each day (normally 4:00 p.m. Eastern Time) the New York Stock
Exchange is open. GAM Japan Capital's NAV is calculated at the close of trading
on the Tokyo Stock Exchange.
Fund shares are offered on a continuous basis. When you issue an order to buy,
sell, or exchange shares by 4:00 p.m. Eastern Time on a regular trading day,
your order will be processed at that day's NAV plus any applicable sales
charges.
The Funds invest in securities traded on foreign exchanges. Many of these
securities may be traded on days when the New York or Tokyo exchanges are not
open, or not traded on days when the New York or Tokyo exchanges are open. The
Funds will normally value securities traded on foreign exchanges at the last
quoted sale price available before the close of the New York Stock Exchange, or,
in the case of GAM Japan Capital Fund, before the close of the Tokyo Stock
Exchange.
The Company offers A, B, C, and D class shares. Each class involves different
sales charges, features and expenses.
32
----
FOR MORE INFORMATION PLEASE CALL 800-426-4685
<PAGE>
<TABLE>
<CAPTION>
===================================================================================================================================
A, B, C, AND D SHARE COMPARISON
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
CLASS A CLASS B CLASS C CLASS D
TERMS Offered at NAV plus Offered at NAV with no Offered at NAV with no Offered at NAV plus
a front-end sales charge front-end sales charge, front-end sales charge, a front-end sales
but with a Contingent but with a Contingent charge which is
Deferred Sales Charge Deferred Sales Charge lower than the
(CDSC) when shares are (CDSC) of 1.00% sales charge on
sold if shares are sold within A Shares
one year after purchase
- -----------------------------------------------------------------------------------------------------------------------------------
All Funds All Funds All Funds GAM International,
AVAILABILITY GAM Global, and
GAM Pacific Basin
Funds
- -----------------------------------------------------------------------------------------------------------------------------------
ONGOING Lower than Class B, C, Higher than A or D Higher than A or D Higher than A shares,
EXPENSES or D but lower than B or C
- -----------------------------------------------------------------------------------------------------------------------------------
APPROPRIATE o Who prefer a single o Who want to invest all o Who want to invest all o Who want a lower
FOR INVESTORS: front-end sales charge. money immediately, money immediately, front-end sales
with no front-end with no front-end charge
o With a longer investment charge charge
horizon o Who may have a
o With a shorter o With a shorter shorter investment
o Who qualify for investment horizon. investment horizon horizon
reduced sales charges
on larger investments o Who may benefit from
a lower CDSC if
shares are sold within
one year
- -----------------------------------------------------------------------------------------------------------------------------------
MAXIMUM Unlimited $300,000 $1,000,000 Unlimited, though
INVESTMENT Your purchase of Class B Your purchase of Class C purchases for more than
Shares must be for less Shares must be for less $1,000,000 should
than $300,000, because if than $1,000,000, because be for Class A Shares
you invest $300,000 or if you invest $1,000,000 as you would pay a
more, you will pay less or more, you will pay less lower 12b-1 fee.
in fees and charges if in fees and charges if you
you buy Class A Shares. buy Class A Shares.
</TABLE>
33
----
GAM FUNDS INC PROSPECTUS / SHAREHOLDER INFORMATION
<PAGE>
III. Shareholder Information continued
================================================================================
INFORMATION ABOUT THE REDUCTION OR
WAIVER OF FRONT-END SALES CHARGES:
FRONT-END SALES CHARGES MAY BE REDUCED BY:
o RIGHTS OF ACCUMULATION. This means that you may add the value of any shares
you already own of the same class to the amount of your next investment in
that class for purposes of calculating the sales charge.
o STATEMENT OF INTENTION. This means you can declare your intention to purchase
shares of the same class over a 13-month period and receive the same sales
charge as if you had bought all the shares at once.
o COMBINATION PRIVILEGE. This means you may combine shares of more than one GAM
Fund of the same class for purposes of calculating the sales charge. Also,
you may combine shares purchased in your own account with shares of the same
class purchased for your spouse or children under the age of 21.
Please refer to the Purchase Application or consult with your financial services
firm to take advantage of these purchase options.
FRONT-END SALES CHARGES MAY BE WAIVED...
o For GAM employees or others connected in
designated ways to the firm, to its affiliates, or
to its registered representatives. Please see the SAI for details.
o For large orders and purchases by eligible plans. Please see the SAI for
details, including a description of the commissions GAM Services may advance
to dealers for these purchases.
INFORMATION ABOUT CONTINGENT DEFERRED SALES CHARGE (CDSCS)
CLASS A SHARES are subject to a front-end sales load at the time of purchase.
However, for certain purchases, the initial sales load may be waived. Those
purchases may be subject to a contingent deferred sales charge of 1% on shares
sold within 18 months of purchase if GAM Services has paid a commission (not
waived by the dealer) on the original purchase of shares.
CLASS B SHARES are subject to a CDSC on any sale of shares which drops the
aggregate value of your Class B Share account below the aggregate amount you
have invested during the six years preceding your redemption. Class B shares may
be converted into Class A shares after eight years.
CLASS C SHARES are subject to a CDSC on any sale of shares which drops the
aggregate value of your Class C Share account below the aggregate amount you
have invested during the one year preceding your redemption.
CDSCS WILL BE WAIVED...
o When you sell off the profit from shares that have increased in value over
certain periods (18 months for Class A, 6 years for Class B, 1 year for Class
C).
o When you sell shares you have bought by reinvesting dividends or
distributions, or that you have bought by exchanging shares of other GAM
Funds.
Note: When the Funds determine whether or not you owe a CDSC at the time you
sell shares, the Funds assume that the amounts described in the two points above
are sold first.
34
----
FOR MORE INFORMATION PLEASE CALL 800-426-4685
<PAGE>
<TABLE>
<CAPTION>
Sales Charge Schedules
==========================================================================================================================
FRONT-END SALES CHARGES ON A AND D SHARES
CLASS A SALES CHARGES
==========================================================================================================================
Sales load Sales Load Amount Reallowed
(as % of (as % of Net to Dealers (as %
Purchase amount Offering Price) Amount Invested) of Offering Price)
<S> <C> <C> <C>
up to $100,000 5.00% 5.26% 4.00%
$100,000-$299,999 4.00% 4.17% 3.00%
$300,000-$599,999 3.00% 3.09% 2.00%
$600,000-$999,999 2.00% 2.04% 1.00%
$1,000,000# and over 0.00%
Class A shares pay a 0.30% 12b-1 fee (of which 0.25% is reallowed to dealers).
CLASS D SALES CHARGES
==========================================================================================================================
Sales load Sales Load Amount Reallowed
(as % of (as % of Net to Dealers (as %
Purchase amount Offering Price) Amount Invested) of Offering Price)
<S> <C> <C> <C>
up to $100,000 3.50% 3.63% 2.50%
$100,000-$299,999 2.50% 2.56% 1.50%
$300,000-$599,999 2.00% 2.04% 1.00%
$600,000-$999,999 1.50% 1.52% 1.00%
$1,000,000# and over* 0.00%
Class D shares pay a 0.50% 12b-1 fee (all of which is reallowed to dealers).
*Purchases of $1 million or more should be for Class A shares. Please consult
your financial services firm.
CONTINGENT DEFERRED SALES CHARGES (CDSCS) ON CLASS B AND C SHARES
CLASS B SHARES
==========================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C>
THE YEAR YOU SELL SHARES 1ST 2ND 3RD 4TH 5TH 6TH 7TH & AFTER
B SHARES 5% 4% 3% 3% 2% 1% 0%
Dealer commission: 4%
Class B shares pay a 1% 12b-1/service fee (of which 0.25% is reallowed to
dealers beginning in year 2).
CLASS C SHARES
==========================================================================================================================
</TABLE>
THE YEAR YOU SELL SHARES 1ST 2ND & AFTER
C SHARES 1% 0%
Dealer commission: 1% (Investment must be held at least 12 months.)
Class C shares pay a 1% 12b-1/service fee (all of which is reallowed to
dealers beginning in year 2).
35
----
GAM FUNDS INC PROSPECTUS / RISK AND RETURN SUMMARY
<PAGE>
III. Shareholder Information continued
================================================================================
CDSC WAIVERS (CONTINUED FROM PG. 34)
o For shares sold from the registered accounts of persons who have died or
become disabled.
o For redemptions in connection with tax-qualified retirement plan
distributions, including lump-sum or required distributions or tax-free
return of excess contributions to an IRA.
o For sales of shares from Qualified Retirement Plans that offer Funds managed
by GIML. This waiver applies under two conditions: a) the plan must continue
to offer Funds managed by GIML after the redemption; or b) the Plan is being
fully "cashed out," with all assets distributed to its participants.
o For share sales under the Systematic Withdrawal Plan. No more than 10% per
year of the account balance may be sold by Systematic Withdrawal, and the
account must maintain a minimum $10,000 balance.
o For exchanges between same share classes of other GAM Funds.
For detailed rules applicable to CDSC waivers, please read the SAI.
HOW TO BUY SHARES
You may buy shares through your financial services firm, or you may buy shares
directly by mail from the Transfer Agent, Boston Financial Data Services.
To buy shares directly by mail, complete the appropriate parts of the Purchase
Application (included with this Prospectus). Make your check out in the
appropriate amount to the order of "GAM Funds, Inc." Send the application and
check (U.S. dollars) to:
GAM Funds, Inc.
c/o Boston Financial Data Services
P.O. Box 9137
Boston, Massachusetts 02205
You may pay for shares by wire transfer after you have mailed in your Purchase
Application. See the wire instructions on the Purchase Application.
MINIMUM INVESTMENT AMOUNTS
Initial investment $ 5,000
Subsequent investment 100
Initial IRA account investment 2,000
Subsequent IRA account investment 100
At their discretion, the Funds may waive minimum investment requirements for
custodial accounts, employee benefit plans or accounts opened under provisions
of the Uniform Gifts to Minors Act (UGMA).
Each Fund reserves the right to refuse any order for the purchase of shares.
Shareholders will be notified of any such action as required by law.
The Funds are not designed for professional market timing organizations,
individuals, or entities using programmed or frequent exchanges or trades.
Frequent exchanges or trades may be disruptive to the management of the Fund and
can raise its expenses. The Funds' principal underwriter reserves the right to
reject or restrict any specific purchase and exchange requests with respect to
market timers and reserves the right to determine, in its sole discretion, that
an individual or entity is or has acted as a market timer.
36
----
FOR MORE INFORMATION PLEASE CALL 800-426-4685
<PAGE>
================================================================================
HOW TO SELL SHARES
You may sell shares on any day the New York Stock Exchange is open, either
through your financial services firm or directly, through the Transfer Agent,
Boston Financial Data Services. Financial services firms must receive your sell
order before 4:00 p.m. Eastern Time, and are responsible for furnishing all
necessary documentation to the Transfer Agent.
TO SELL SHARES BY MAIL VIA
THE TRANSFER AGENT
o Send a written request, indicating the Fund name, class of shares, number of
shares or dollar amount to be sold, and signed by the person(s) whose name(s)
appear on the account records, to:
GAM Funds, Inc.
c/o Boston Financial Data Services
P.O. Box 8264
Boston, Massachusetts 02266-8264
o You will need a signature guarantee (a) if you sell shares worth $50,000 or
more; (b) if you want the money from your sale to be paid to someone other
than the registered accountholder (usually, this means to someone other than
yourself) or (c) if you want the money mailed to an address other than the
address of record (usually some other address than your own). You can get a
signature guarantee from most banks, from a member firm of a national stock
exchange, or from another guarantor institution. A notary public is not
acceptable.
o If you are required to provide a signature guarantee and live outside the
United States, a foreign bank acceptable to the Transfer Agent may provide a
signature guarantee. If such signature guarantee is not acceptable to the
Transfer Agent, you may experience a delay in processing of the redemption.
You may get a signature guarantee from a foreign bank which, for example, is
an overseas branch of a United States bank, member firm of a stock exchange
or has a branch office in the United States.
o If you hold share certificates for the shares you want to sell, you must send
them along with your sell order. Please call the Transfer Agent at
800-426-4685 before you send share certificates.
o If you sell shares as a corporation, agent, fiduciary, surviving joint owner,
or individual retirement accountholder, you will need extra documentation.
Contact the Transfer Agent to make sure you include all required documents
with your order.
TO SELL SHARES BY PHONE OR FAX
VIA THE TRANSFER AGENT
To sell shares by telephone or fax order, you must have first selected the
telephone redemption privilege, either on your initial Purchase Application, or
later, before placing your sell order.
INVOLUNTARY REDEMPTIONS
Your account may be closed by a Fund if, because of withdrawals, its value falls
below $1,000. These rules apply:
o You will be asked by the Fund to buy more shares within 30 days to raise your
account value above $1,000. If you do not do this, the Fund may redeem our
account and send you the proceeds. You will not owe any CDSC on the proceeds
of an involuntarily redeemed account.
o If you draw your account below $1,000 via the Systematic Withdrawal Plan (see
"Account Services," below), your account will not be subject to involuntary
redemption.
o Involuntary redemption does not apply to retirement accounts or accounts
maintained by administrators in retirement plans.
o No account will be closed if its value drops below $1,000 because of Fund
performance, or because of the payment of sales charges.
REINSTATEMENT PRIVILEGE
If you sell shares of a Fund, you may reinvest some or all of the proceeds
within 60 days without a sales charge. These rules apply:
o You must reinvest in the same account or a new account, in the same class of
shares.
o If you paid a CDSC at the time of sale, you will be credited with the portion
of the CDSC paid from of the reinvested proceeds.
37
----
GAM FUNDS INC PROSPECTUS / RISK AND RETURN SUMMARY
<PAGE>
III. Shareholder Information continued
================================================================================
HOW TO EXCHANGE SHARES
You may exchange shares of any class of any Fund for shares of the same class of
another Fund, including the GAM Money Market Account, generally without paying
any sales charge. This may be done by phone or fax, or by mail.
TO EXCHANGE SHARES BY PHONE OR FAX VIA THE TRANSFER AGENT
Before you try to exchange shares by telephone or fax, make sure you have this
privilege. You must have selected it on your initial Purchase Application. If
you don't have this privilege now, you can still get it by calling the Transfer
Agent at 800-426-4685.
TO EXCHANGE SHARES BY MAIL VIA
THE TRANSFER AGENT
o Send a written request, indicating the Fund name, class of shares, number of
shares or dollar amount to be exchanged, and signed by the person(s) whose
name(s) appear on the account records, to:
GAM Funds, Inc.
c/o Boston Financial Data Services
P.O. Box 8264
Boston, Massachusetts 02266-8264
o Send a new Purchase Application, showing the simultaneous purchase of new
Fund shares. You can get a new Purchase Application by calling the Transfer
Agent at 800-426-4685.
EXCHANGES TO OR FROM
THE GAM MONEY MARKET ACCOUNT
o Shares of one GAM Fund may be exchanged for shares of the same class of
another GAM Fund or for shares of the Reserve Funds-Primary Fund (the "GAM
Money Market Account").
o The GAM Money Market Account does not offer D shares. You may exchange a
Fund's Class D shares for Class A shares of the GAM Money Market Account.
o Fund shares subject to a CDSC (i.e., Class B and Class C Shares) will be
subject to the same CDSC after exchanging them for shares of the GAM Money
Market Account. They will "age" from the original Fund purchase date.
LIMITS ON EXCHANGES
The exchange vehicle is not intended for short-term trading. Excessive exchange
activity may interfere with portfolio management and have an adverse effect on
shareholders. Each Fund reserves the right to revise or terminate the exchange
privilege, limit the amount or number of exchanges, or reject any exchange.
Shareholders will be notified of any such action as required by law.
38
----
FOR MORE INFORMATION PLEASE CALL 800-426-4685
<PAGE>
================================================================================
ACCOUNT SERVICES
You may select the following account services on your Purchase Application, or
at any time thereafter, in writing.
o DIVIDEND REINVESTMENT
Automatic, unless you direct that your dividends be mailed to you.
o SYSTEMATIC WITHDRAWAL PLAN
You may order a specific dollar amount sale of shares at regular intervals
(monthly or quarterly). $10,000 account minimum.
o AUTOMATIC INVESTMENT PLAN
You may order a specific dollar amount purchase of shares at regular
intervals (monthly or quarterly), with payments made electronically from an
account you designate at a financial services institution.
$100 minimum per automatic investment.
TA2000/VOICE
Beginning June 2000, you may access GAM Fund information through our phone
inquiry system. You may select from a menu of choices that includes prices,
dividends and capital gains, account balances and ordering duplicate statements.
TELEPHONE AND FACSIMILE PRIVILEGES. Telephone requests may be recorded. The
Transfer Agent has procedures in place to verify caller identity. Proceeds from
telephone or facsimile sales will be mailed only to your registered account
address or transferred by wire to an account you designate when you establish
this privilege. 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 accountholder caused by an unauthorized transaction.
Please contact your financial representative for further help with your account,
or contact the Transfer Agent:
Boston Financial Data Services
Two Heritage Drive
Quincy, MA 02171
(800) 426-4685
(617) 483-5000
Fax: (617) 483-2405
DIVIDENDS AND TAX MATTERS
So long as each Fund meets the requirements of a tax-qualified registered
investment company, it pays no federal income tax on the earnings it distributes
to shareholders. Each Fund intends to pay a semi-annual 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 capital gains are taxable at the rate applicable to the length of time the
investments have been held. Dividends from other sources are generally taxable
as ordinary income.
After a Fund makes its semi-annual distribution, the value of each outstanding
share will decrease by the amount of the distribution. If you buy shares
immediately before the record date of the distribution, you will pay the full
price for the shares, then receive some portion of the price back as a taxable
dividend or capital gain distribution.
Form 1099 DIV and Tax Notice, mailed to you every January, details your
distributions and their Federal tax category.
Normally, any sale or exchange of shares is a taxable event. Depending on your
purchase price and sale price, you may have a gain or loss on the transaction.
Please verify your tax liability with your tax professional. Consult the SAI for
certain other tax consequences to shareholders.
39
----
GAM FUNDS INC PROSPECTUS / RISK AND RETURN SUMMARY
<PAGE>
IV. FINANCIAL HIGHLIGHTS
The financial highlights table is intended to help you understand the Fund's
financial performance for the past 5 years. Unless otherwise noted, the selected
financial information below is for the fiscal periods ending December 31 of each
year. The accounting firm PricewaterhouseCoopers LLP audited the Funds'
financial statements for the year ended December 31, 1999. 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 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.
<TABLE>
<CAPTION>
===============================================================================================================
GAM GLOBAL FUND
CLASS A SHARES
-----------------------------------------------------------
99 98 97 96 95
===========================================================
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE,
beginning of period $19.04 $18.71 $14.35 $13.51 $10.60
------ ------ ------ ------ ------
NET ASSET VALUE,
end of period $21.75 $19.04 $18.71 $14.35 $13.51
====== ====== ====== ====== ======
TOTAL RETURN FOR THE PERIOD^
(without deduction of sales load) 14.23% 2.57% 34.95% 12.74% 36.25%
TOTAL NET ASSETS (000 omitted) $ 66,825 $140,274 $65,739 $19,583 $26,161
INCOME FROM INVESTMENT OPERATIONS
Net investment income/(loss) (0.13)^^ (0.05)^^ (0.04)^^ 0.16^^ 0.35
Net realized and unrealized gain/(loss)
on investments 2.84 0.55 5.04 1.55 3.48
------ ------ ------ ------ ------
Total from investment operations 2.71 0.50 5.00 1.71 3.83
------ ------ ------ ------ ------
LESS DISTRIBUTIONS
Dividends from net investment income -- -- (0.02) (0.08) (0.30)
Distributions from net realized gains -- (0.17) (0.62) (0.79) (0.62)
------ ------ ------ ------ ------
Total distributions -- (0.17) (0.64) (0.87) (0.92)
------ ------ ------ ------ ------
RATIOS TO AVERAGE NET ASSETS
Expenses* 1.89% 1.71% 1.83% 2.26% 2.16%
Net investment income (0.69)% (0.25)% (0.25)% 1.17% 2.96%
Portfolio turnover rate 1.07% 123% 48% 107% 60%
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>
^ Total return calculated for a period less than one year is not annualized.
^^ For the years ended 31st December 1996, 1997, 1998 and 1999, net investment
income per share has been determined based on the weighted average shares
outstanding method.
^^^ The inception dates for Class B and C were 26th May, 1998 and 19th May 1998,
respectively.
* The ratio of expenses to average net assets for the year ended 31st
December 1996 includes amounts paid through expense offset arrangements.
Prior and subsequent period ratios exclude these amounts.
+ Period from 6th October, 1995 (inception) to 31st December, 1995.
++ Annualized.
40
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FOR MORE INFORMATION PLEASE CALL 800-426-4685
<PAGE>
<TABLE>
<CAPTION>
====================================================================================================================================
GAM GLOBAL FUND
CLASS B SHARES^^^ CLASS C SHARES^^^ CLASS D SHARES
------------------- ------------------- ------------------------------------------------
99 98 99 98 99 98 97 96 95+
=================== =================== ================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
beginning of period $19.11 $20.99 $19.10 $21.06 $18.79 $ 18.50 $14.22 $13.48 $13.46
------ ------ ------ ------ ------ ------- ------ ------ ------
NET ASSET VALUE,
end of period $21.66 19.11 $21.63 19.10 $21.41 $ 18.79 $18.50 $14.22 $13.48
------ ------ ------ ------ ------ ------- ------ ------ ------
TOTAL RETURN FOR THE PERIOD^
(without deduction of sales load) 13.34% (8.96)% 13.25% (9.31)% 13.94% 2.38% 34.80% 11.54% 6.97%
TOTAL NET ASSETS (000 omitted) $9,454 $10,402 $7,901 $9,014 $5,632 $10,082 $3,768 $815 $295
INCOME FROM INVESTMENT OPERATIONS
Net investment income/(loss) (0.30)^^ (0.13)^^ (0.30)^^ (0.14)^^ (0.18)^^ (0.08)^^ (0.09)^^ 0.07^^ --
Net realized and unrealized gain/(loss)
on investments 2.85 (1.75) 2.83 (1.82) 2.80 0.54 5.02 1.47 0.92
------ ------ ------ ------ ------ ------- ------ ------ ------
Total from investment operations 2.55 (1.88) 2.53 (1.96) 2.62 0.46 4.93 1.54 0.92
------ ------ ------ ------ ------ ------- ------ ------ ------
LESS DISTRIBUTIONS
Dividends from net investment income -- -- -- -- -- -- (0.03) (0.01) (0.28)
Distributions from net realized gains -- -- -- -- -- (0.17) (0.62) (0.79) (0.62)
------ ------ ------ ------ ------ ------ ------ ------ ------
Total distributions -- -- -- -- -- (0.17) (0.65) (0.80) (0.90)
------ ------ ------ ------ ------ ------ ------ ------ ------
RATIOS TO AVERAGE NET ASSETS
Expenses* 2.76% 2.70%++ 2.77% 2.83%++ 2.16% 1.87% 2.01% 2.88% 2.81%++
Net investment income (1.61)% (1.14)%++ (1.62)% (1.27)%++ (0.98)% (0.41)% (0.53)% 0.52% (0.09)%++
Portfolio turnover rate 107% 123% 107% 123% 107% 123% 48% 107% 60%
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>
41
----
GAM FUNDS INC PROSPECTUS / RISK AND RETURN SUMMARY
<PAGE>
IV. FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
===============================================================================================================
GAM INTERNATIONAL FUND
CLASS A SHARES
-------------------------------------------------------------
99 98 97 96 95
=============================================================
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE,
beginning of period $30.06 $28.46 $23.15 $21.37 $17.21
------ ------ ------ ------ ------
NET ASSET VALUE,
end of period $32.16 $30.06 $28.46 $23.15 $21.37
====== ====== ====== ====== ======
TOTAL RETURN FOR THE PERIOD^
(without deduction of sales load) 6.99% 7.22% 28.93% 8.98% 30.09%
TOTAL NET ASSETS (000 omitted) $1,271,042 $2,685,713 $1,793,665 $1,009,819 $560,234
INCOME FROM INVESTMENT OPERATIONS
Net investment income/(loss) 0.17^^ 0.08^^ 0.08^^ 0.57^^ 0.52
Net realized and unrealized gain/(loss)
on investments 1.93 2.03 6.58 1.34 4.64
------ ------ ------ ------ ------
Total from investment operations 2.10 2.11 6.66 1.91 5.16
------ ------ ------ ------ ------
LESS DISTRIBUTIONS
Dividends from net investment income -- (0.05) (0.18) (0.09) (0.47)
Distributions from net realized gains -- (0.46) (1.17) (0.04) (0.53)
------ ------ ------ ------ ------
Total distributions -- (0.51) (1.35) (0.13) (1.00)
------ ------ ------ ------ ------
RATIOS TO AVERAGE NET ASSETS
Expenses* 1.76% 1.66% 1.68% 1.56% 1.57%
Net investment income 0.62% 0.27% 0.28% 2.70% 3.89%
Portfolio turnover rate 117% 73% 48% 82% 35%
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>
^ Total return calculated for a period less than one year is not annualized.
^^ For the years ended 31st December 1996, 1997, 1998 and 1999, net investment
income per share has been determined based on the weighted average shares
outstanding method.
^^^ The inception dates for Class B and C were 26th May, 1998 and 19th May 1998,
respectively.
* The ratio of expenses to average net assets for the year ended 31st December
1996 includes amounts paid through expense offset arrangements. Prior and
subsequent period ratios exclude these amounts.
+ Period from 18th September, 1995 (inception) to 31st December, 1995.
++ Annualized.
42
----
FOR MORE INFORMATION PLEASE CALL 800-426-4685
<PAGE>
<TABLE>
<CAPTION>
====================================================================================================================================
GAM INTERNATIONAL FUND
CLASS B SHARES^^^ CLASS C SHARES^^^ CLASS D SHARES
----------------------- ------------------- ---------------------------------------------------
99 98 99 98 99 98 97 96 95+
======================= =================== ===================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
beginning of period $30.41 $33.39 $30.37 $32.61 $29.92 $28.34 $23.07 $21.35 $20.46
------ ------ ------ ------ ------ ------ ------ ------ ------
NET ASSET VALUE,
end of period $32.31 $30.41 $32.29 $30.37 $31.96 $29.92 $28.34 $23.07 $21.35
====== ====== ====== ====== ====== ====== ====== ====== ======
TOTAL RETURN FOR THE PERIOD^
(without deduction of sales load) 6.25% (8.92)% 6.32% (6.87)% 6.82% 7.13% 28.78% 8.33% 9.26%
TOTAL NET ASSETS (000 omitted) $71,930 $65,238 79,556 $78,452 $101,364 $158,797 $99,283 $38,716 $8,714
INCOME FROM INVESTMENT OPERATIONS
Net investment income/(loss) (0.07)^^ (0.20)^^ (0.05)^^ (0.20)^^ 0.09^^ 0.04^^ 0.01^^ 0.45^^ 0.10
Net realized and unrealized
gain/(loss) on investments 1.97 (2.78) 1.97 (2.04) 1.95 2.03 6.59 1.32 1.78
------ ------ ------ ------ ------ ------ ------ ------ ------
Total from investment operations 1.90 (2.98) (1.92) (2.24) 2.04 2.07 6.60 1.77 1.88
------ ------ ------ ------ ------ ------ ------ ------ ------
LESS DISTRIBUTIONS
Dividends from net investment
income -- -- -- -- -- (0.03) (0.16) (0.01) (0.46)
Distributions from net realized
gains -- -- -- -- -- (0.46) (1.17) (0.04) (0.53)
------ ------ ------ ------ ------ ------ ------ ------ ------
Total distributions -- -- -- -- -- (0.49) (1.33) (0.05) (0.99)
------ ------ ------ ------ ------ ------ ------ ------ ------
RATIOS TO AVERAGE NET ASSETS
Expenses* 2.48% 2.54%++ 2.48% 2.52%++ 1.94% 1.80% 1.82% 2.06% 2.22%++
Net investment income (0.24)% (1.10)%++ (0.19)% (1.14)%++ 0.34% 0.14% 0.05% 2.13% 1.90%++
Portfolio turnover rate 117% 73% 117% 73% 117% 73% 48% 82% 35%
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>
43
----
GAM FUNDS INC PROSPECTUS / RISK AND RETURN SUMMARY
<PAGE>
IV. FINANCIAL HIGHLIGHTS continued
<TABLE>
<CAPTION>
===============================================================================================================
GAM PACIFIC BASIN FUND
CLASS A SHARES
------------------------------------------------------------
99 98 97 96 95
============================================================
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE,
beginning of period $ 8.23 $ 9.69 $ 15.26 $ 16.97 $ 17.62
------- ------- ------- ------- -------
NET ASSET VALUE,
end of period $ 14.17 $ 8.23 $ 9.69 $ 15.26 $ 16.97
======= ======= ======= ======= =======
TOTAL RETURN FOR THE PERIOD^
(without deduction of sales load) 74.91% (3.99)% (30.00)% (0.39)% 4.50%
TOTAL NET ASSETS (000 omitted) $46,504 $16,971 $23,046 $49,808 $53,944
INCOME FROM INVESTMENT OPERATIONS
Net investment income/(loss) (0.04)^^ (0.01)^^ 0.00^^ 0.04^^ --
Net realized and unrealized gain/(loss)
on investments 6.19 (0.51) (4.45) (0.11) 0.61
------- ------- ------- ------- -------
Total from investment operations 6.15 (0.52) (4.45) (0.07) 0.61
------- ------- ------- ------- -------
LESS DISTRIBUTIONS
Dividends from net investment income (0.01) (0.22) -- (0.74) --
Distributions in excess of net investment income (0.20) -- -- -- --
Distributions from net realized gains -- (0.72) (1.12) (0.90) (1.26)
------- ------- ------- ------- -------
Total distributions (0.21) (0.94) (1.12) (1.64) (1.26)
------- ------- ------- ------- -------
RATIOS TO AVERAGE NET ASSETS
Expenses* 2.26% 2.42% 1.98% 1.76% 1.98%
Net investment income (0.42)% (0.11)% 0.02% 0.22% (0.07)%
Portfolio turnover rate 63% 55% 42% 46% 64%
BANK LOANS
Amount outstanding
at end of period (000 omitted) -- -- $2.102~ -- --
Average amount of bank loans outstanding
during the period (000 omitted) -- -- $5.8~ -- --
Average number of shares outstanding
during the period (monthly average)
(000 omitted) -- -- 3.265 -- --
Average amount of debt per share
during the period -- -- $0.002 -- --
</TABLE>
^ Total return calculated for a period less than one year is not annualized.
^^ For the years ended 31st December 1996, 1997, 1998 and 1999, net investment
income per share has been determined based on the weighted average shares
outstanding method.
^^^ The inception dates for Class B and C were 26th May, 1998 and 1st June 1998,
respectively.
* The ratio of expenses to average net assets for the year ended 31st December
1996 includes amounts paid through expense offset arrangements. Prior and
subsequent period ratios exclude these amounts.
+ Period from 18th October, 1995 (inception) to 31st December, 1995.
++ Annualized.
~ The average daily interest rate during the period and at 31st December, 1997
was 8.69%.
44
----
FOR MORE INFORMATION PLEASE CALL 800-426-4685
<PAGE>
<TABLE>
<CAPTION>
====================================================================================================================================
GAM PACIFIC BASIN FUND
CLASS B SHARES^^^ CLASS C SHARES^^^ CLASS D SHARES
------------------- --------------------- ----------------------------------------------
99 98 99 98 99 98 97 96 95+
=================== ===================== ==============================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
beginning of period $ 8.96 $ 9.15 $ 8.12 $ 8.54 $ 8.11 $ 9.62 $15.20 $16.96 $17.36
------ ------ ------ ------ ------ ------ ------ ------ ------
NET ASSET VALUE,
end of period $14.89 $ 8.96 $13.21 $ 8.12 $13.95 $ 8.11 $ 9.62 $15.20 $16.96
====== ====== ====== ====== ====== ====== ====== ====== ======
TOTAL RETURN FOR THE PERIOD ^
(without deduction of sales load) 67.89% (0.35)% 63.15% (3.87)% 73.71% (4.64)% (30.18)% (1.19)% 2.35%
TOTAL NET ASSETS (000 omitted) $6,169 $ 273 $1,509 $ 163 $1,727 $1,051 $1,583 $1,878 $1,547
INCOME FROM INVESTMENT OPERATIONS
Net investment incomel(loss) (0.19)^^ (0.35)^^ (0.39)^^ (0.70)^^ (0.16)^^ (0.01)^^ 0.01^^ (0.10)^^ (0.02)
Net realized and unrealized gain/(loss)
on investments 6.26 0.32 5.51 0.37 6.13 (0.53) (4.47) (0.11) 0.26
------ ------ ------ ------ ------ ------ ------ ------ ------
Total from investment operations 6.07 (0.03) 5.12 (0.33) 5.97 (0.54) (4.46) (0.21) 0.24
------ ------ ------ ------ ------ ------ ------ ------ ------
LESS DISTRIBUTIONS
Dividends from net investment income -- (0.04) -- -- -- (0.25) -- (0.65) --
Distributions in excess of net
investment income (0.14) -- (0.03) -- (0.13) -- -- -- --
Distributions from net realized gains -- (0.12) -- (0.09) -- (0.72) (1.12) (0.90) (0.64)
------ ------ ------ ------ ------ ------ ------ ------ ------
Total distributions (0.14) (0.16) (0.03) (0.09) (0.13) (0.97) (1.12) (1.55) (0.64)
------ ------ ------ ------ ------ ------ ------ ------ ------
RATIOS TO AVERAGE NET ASSETS
Expenses* 3.48% 9.39%++ 5.57% 20.34%++ 2.89% 2.53% 2.08% 2.28% 2.63%++
Net investment income (1.59)% (7.52)%++ (3.82)% (19.15)%++ (1.55)% (0.17)% (0.09)% (0.57)% (1.49)%++
Portfolio turnover rate 63% 55% 63% 55% 63% 55% 42% 46% 64%
</TABLE>
45
----
GAM FUNDS INC PROSPECTUS / RISK AND RETURN SUMMARY
<PAGE>
IV. FINANCIAL HIGHLIGHTS continued
<TABLE>
<CAPTION>
===============================================================================================================
GAM JAPAN CAPITAL FUND
CLASS A SHARES
--------------------------------------------------------
99 98 97 96 95
========================================================
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE,
beginning of period $ 7.65 $ 8.44 $ 9.39 $ 10.16 $ 9.62
------- ------- ------- ------- -------
NET ASSET VALUE,
end of period $ 13.85 $ 7.65 $ 8.44 $ 9.39 $ 10.16
======= ======= ======= ======= =======
TOTAL RETURN FOR THE PERIOD^
(without deduction of sales load) 87.05% (2.75)% (2.58)% 0.15% 6.45%
TOTAL NET ASSETS (000 omitted) $66,757 $22.654 $30,872 $36,504 $13,600
INCOME FROM INVESTMENT OPERATIONS
Net investment income/(loss) (0.14)^^ (0.06)^^ (0.10)^^ (0.05)^^ (0.07)
Net realized and unrealized gain/(loss)
on investments 6.77 (0.16) (0.11) 0.07 0.69
------- ------- ------- ------- -------
Total from investment operations 6.63 (0.22) (0.21) (0.02) 0.62
------- ------- ------- ------- -------
LESS DISTRIBUTIONS
Dividends from net investment income -- -- -- (0.70) (0.05)
Distributions in excess of net investment income (0.43) -- -- -- --
Distributions from net realized gains -- (0.57) (0.74) (0.09) (0.03)
------- ------- ------- ------- -------
Total distributions (0.43) (0.57) (0.74) (0.79) (0.08)
------- ------- ------- ------- -------
RATIOS TO AVERAGE NET ASSETS
Expenses* 2.06% 2.16% 2.15% 1.84% 3.61%**
Net investment income (1.38)% (0.78)% (1.06)% (0.50)% (2.35)%
Portfolio turnover rate 77% 59% 76% 23% 122%
</TABLE>
<TABLE>
<CAPTION>
=======================================================================================
GAM JAPAN CAPITAL FUND
CLASS B SHARES^^^ CLASS C SHARES^^^
---------------------------- ----------------------------
99 98 99 98
============================ ============================
<S> <C> <C> <C> <C>
NET ASSET VALUE,
beginning of period $ 8.11 $ 8.49 $ 8.12 $ 8.56
------ ------ ------ ------
NET ASSET VALUE,
end of period $14.45 $ 8.11 $14.65 $ 8.12
====== ====== ====== ======
TOTAL RETURN FOR THE PERIOD^
(without deduction of sales load) 82.18% (4.48)% 83.30% (5.14)%
TOTAL NET ASSETS (000 omitted) $3,100 $ 665 $2,156 $ 954
INCOME FROM INVESTMENT OPERATIONS
Net investment income/(loss) (0.34)^^ (0.19)^^ (0.34)^^ (0.15)^^
Net realized and unrealized gain/(loss)
on investments 6.98 (0.19) 7.09 (0.29)
------ ------ ------ ------
Total from investment operations 6.64 (0.38) 6.75 (0.44)
------ ------ ------ ------
LESS DISTRIBUTIONS
Dividends from net investment income -- -- -- --
Distributions in excess of net
investment income (0.30) -- (0.22) --
Distributions from net realized gains -- -- -- --
------ ------ ------ ------
Total distributions (0.30) -- (0.22) --
------ ------ ------ ------
RATIOS TO AVERAGE NET ASSETS
Expenses* 3.80% 5.31%++ 3.94% 3.99%++
Net investment income (3.16)% (4.22)%++ (3.21)% (3.00)%++
Portfolio turnover rate 77% 59% 77% 59%
</TABLE>
^ Total return calculated for a period less than one year is not annualized.
^^ For the years ended 31st December 1996, 1997, 1998 and 1999, net investment
income per share has been determined based on the weighted average shares
outstanding method.
^^^ The inception dates for Class B and C were 26th May, 1998 and 19th May 1998,
respectively.
* The ratio of expenses to average net assets for the year ended 31st December
1996 includes amounts paid through expense offset arrangements. Prior and
subsequent period ratios exclude these amounts.
** In the absence of expense reimbursement, for the period ended 31st December,
1995, expenses on an annualized basis would have represented 4.61% of the
average net assets.
++ Annualized.
46
----
FOR MORE INFORMATION PLEASE CALL 800-426-4685
<PAGE>
IV. FINANCIAL HIGHLIGHTS continued
<TABLE>
<CAPTION>
===============================================================================================================
GAM EUROPE FUND
CLASS A SHARES
---------------------------------------------------------
99 98 97 96 95
=========================================================
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE,
beginning of period $ 12.63 $ 12.57 $ 11.85 $ 10.04 $ 8.66
------- ------- ------- ------- -------
NET ASSET VALUE,
end of period $ 13.08 $ 12.63 $ 12.57 $ 11.85 $ 10.04
======= ======= ======= ======= =======
TOTAL RETURN FOR THE PERIOD^
(without deduction of sales load) 16.21% 10.70% 27.55% 21.32% 16.77%
TOTAL NET ASSETS (000 omitted) $20,450 $49,631 $39,101 $25,127 $22,961
INCOME FROM INVESTMENT OPERATIONS
Net investment income/(loss) (0.09)^^ 0.03^^ 0.02^^ 0.07^^ 0.07
Net realized and unrealized gain/(loss)
on investments 1.96 1.28 3.15 2.06 1.38
------- ------- ------- ------- -------
Total from investment operations 1.87 1.31 3.17 2.13 1.45
------- ------- ------- ------- -------
LESS DISTRIBUTIONS
Dividends from net investment income -- (0.02) (0.06) (0.01) (0.06)
Distributions from net realized gains (1.42) (1.23) (2.39) (0.31) (0.01)
------- ------- ------- ------- -------
Total distributions (1.42) (1.25) (2.45) (0.32) (0.07)
------- ------- ------- ------- -------
RATIOS TO AVERAGE NET ASSETS
Expenses* 2.48% 2.06% 1.81% 1.89% 2.12%
Net investment income (0.79)% 0.24% 0.15% 0.59% 0.75%
Portfolio turnover rate 109% 168% 80% 76% 145%
</TABLE>
<TABLE>
<CAPTION>
=======================================================================================
GAM EUROPE FUND
CLASS B SHARES^^^ CLASS C SHARES^^^
----------------------------- -----------------------------
99 98 99 98
============================= =============================
<S> <C> <C> <C> <C>
NET ASSET VALUE,
beginning of period $12.82 $15.38 $12.70 $15.16
------ ------ ------ ------
NET ASSET VALUE,
end of period $13.08 $12.82 $12.77 $12.70
====== ====== ====== ======
TOTAL RETURN FOR THE PERIOD ^
(without deduction of sales load) 14.48% (9.82)% 13.11% (9.32)%
TOTAL NET ASSETS (000 omitted) $1,568 $1,787 $ 743 $ 814
INCOME FROM INVESTMENT OPERATIONS
Net investment incomel(loss) (0.29)^^ (0.20)^^ (0.43)^^ (0.28)^^
Net realized and unrealized gain/(loss)
on investments 1.97 (1.37) 1.92 (1.19)
------ ------ ------ ------
Total from investment operations 1.68 (1.57) 1.49 (1.47)
------ ------ ------ ------
LESS DISTRIBUTIONS
Dividends from net investment income -- -- -- --
Distributions from net realized gains (1.42) (0.99) (1.42) (0.99)
------ ------ ------ ------
Total distributions (1.42) (0.99) (1.42) (0.99)
------ ------ ------ ------
RATIOS TO AVERAGE NET ASSETS
Expenses* 4.17% 3.93%++ 5.35% 4.93%++
Net investment income (2.41)% (2.58)%++ (3.62)% (3.46)%++
Portfolio turnover rate 109% 168% 109% 168%
</TABLE>
^ Total return calculated for a period less than one year is not annualized.
^^ For the years ended 31st December 1996, 1997, 1998 and 1999, net investment
income per share has been determined based on the weighted average shares
outstanding method.
^^^ The inception dates for Class B and C were 26th May, 1998 and 20th May 1998,
respectively.
* The ratio of expenses to average net assets for the year ended 31st December
1996 includes amounts paid through expense offset arrangements. Prior and
subsequent period ratios exclude these amounts.
++ Annualized.
47
----
GAM FUNDS INC PROSPECTUS / RISK AND RETURN SUMMARY
<PAGE>
IV. FINANCIAL HIGHLIGHTS continued
<TABLE>
<CAPTION>
===============================================================================================================
GAM NORTH AMERICA FUND
CLASS A SHARES
------------------------------------------------------------
99 98 97 96 95
============================================================
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE,
beginning of period $ 16.74 $ 17.32 $ 13.56 $ 11.93 $ 9.14
------- ------- ------- ------- -------
NET ASSET VALUE,
end of period $ 18.30 $ 16.74 $ 17.32 $ 13.56 $ 11.93
======= ======= ======= ======= =======
TOTAL RETURN FOR THE PERIOD^
(without deduction of sales load) 9.32% 29.44% 29.41% 24.10% 30.90%
TOTAL NET ASSETS (000 omitted) $28,872 $17,367 $10,966 $ 5,853 $ 5,981
INCOME FROM INVESTMENT OPERATIONS
Net investment income/(loss) (0.07)^^ (0.07)^^ --^^ (0.05)^^ --
Net realized and unrealized gain/(loss)
on investments 1.63 4.76 3.99 2.93 2.83
------- ------- ------- ------- -------
Total from investment operations 1.56 4.69 3.99 2.88 2.83
------- ------- ------- ------- -------
LESS DISTRIBUTIONS
Dividends from net investment income -- -- -- -- --
Distributions from net realized gains -- (5.27) (0.23) (1.25) (0.04)
------- ------- ------- ------- -------
Total distributions -- (5.27) (0.23) (1.25) (0.04)
------- ------- ------- ------- -------
RATIOS TO AVERAGE NET ASSETS
Expenses* 1.90% 2.10% 1.94% 2.61% 2.98%**
Net investment income (0.42)% (0.34)% 0.00% (0.39)% 0.01%
Portfolio turnover rate 13% 70% 15% 9% 9%
</TABLE>
<TABLE>
<CAPTION>
=======================================================================================
GAM NORTH AMERICA FUND
CLASS B SHARES^^^ CLASS C SHARES^^^
----------------------------- ----------------------------
99 98 99 98
============================= ============================
<S> <C> <C> <C> <C>
NET ASSET VALUE,
beginning of period $16.87 $20.08 $16.58 $21.58
------ ------ ------ ------
NET ASSET VALUE,
end of period $18.19 $16.87 $17.91 $16.58
====== ====== ====== ======
TOTAL RETURN FOR THE PERIOD^
(without deduction of sales load) 7.82% (9.68)% 8.02% 0.69%
TOTAL NET ASSETS (000 omitted) $4,048 $ 969 $5,914 $1,142
INCOME FROM INVESTMENT OPERATIONS
Net investment income/(loss) (0.29)^^ (0.57)^^ (0.25)^^ (0.44)^^
Net realized and unrealized gain/(loss)
on investments 1.61 2.17 1.58 0.25
------ ------ ------ ------
Total from investment operations 1.32 1.60 1.33 (0.19)
------ ------ ------ ------
LESS DISTRIBUTIONS
Dividends from net investment income -- -- -- --
Distributions from net realized gains -- (4.81) -- (4.81)
------ ------ ------ ------
Total distributions -- (4.81) -- (4.81)
------ ------ ------ ------
RATIOS TO AVERAGE NET ASSETS
Expenses* 3.11% 7.56%++ 2.90% 8.16%++
Net investment income (1.66)% (5.81)%++ (1.45)% (6.50)%++
Portfolio turnover rate 13% 70% 13% 70%
</TABLE>
^ Total return calculated for a period less than one year is not annualized.
^^ For the years ended 31st December 1996, 1997, 1998 and 1999, net investment
income per share has been determined based on the weighted average shares
outstanding method.
^^^ The inception dates for Class B and C were 26th May, 1998 and 7th July,
1998, respectively.
* The ratio of expenses to average net assets for the year ended 31st December
1996 includes amounts paid through expense offset arrangements. Prior and
subsequent period ratios exclude these amounts.
** In the absence of expense reimbursement, expenses on an annualized basis
would have represented 3.27% of the average net assets.
++ Annualized.
48
----
FOR MORE INFORMATION PLEASE CALL 800-426-4685
<PAGE>
IV. FINANCIAL HIGHLIGHTS continued
<TABLE>
<CAPTION>
===================================================================================================
GAMERICA CAPITAL FUND
CLASS A SHARES
------------------------------------------------------------
99 98 97 96 95+
============================================================
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE,
beginning of period $17.08 $13.43 $10.82 $10.03 $10.00
------ ------ ------ ------ ------
NET ASSET VALUE,
end of period $21.45 $17.08 $13.43 $10.82 $10.03
====== ====== ====== ====== ======
TOTAL RETURN FOR THE PERIOD^
(without deduction of sales load) 28.97% 30.59% 37.28% 18.31% 1.38%
TOTAL NET ASSETS (000 omitted) $51,108 $11,469 $3,799 $1,924 $3,029
INCOME FROM INVESTMENT OPERATIONS
Net investment income/(loss) 0.13^^ (0.01)^^ (0.24)^^ (0.42)^^ 0.07
Net realized and unrealized gain/(loss)
on investments 4.78 4.08 4.23 2.22 0.07
------ ------ ------ ------ ------
Total from investment operations 4.91 4.07 3.99 1.80 0.14
------ ------ ------ ------ ------
LESS DISTRIBUTIONS
Dividends from net investment income (0.07) -- -- -- (0.07)
Distributions from net realized gains (0.47) (0.42) (1.38) (1.01) (0.04)
------ ------ ------ ------ ------
Total distributions (0.54) (0.42) (1.38) (1.01) (0.11)
------ ------ ------ ------ ------
RATIOS TO AVERAGE NET ASSETS
Expenses* 1.84% 2.46% 3.45% 5.16%** 3.73%++**
Net investment income 0.66% (0.03)% (2.04)% (3.79)% 1.36%++
Portfolio turnover rate 20% 29% 22% 27% 11%
</TABLE>
<TABLE>
<CAPTION>
=======================================================================================
GAMERICA CAPITAL FUND
CLASS B SHARES^^^ CLASS C SHARES^^^
---------------------------- ----------------------------
99 98 99 98
============================ ============================
<S> <C> <C> <C> <C>
NET ASSET VALUE,
beginning of period $17.26 $16.57 $17.13 $16.57
------ ------ ------ ------
NET ASSET VALUE,
end of period $21.54 $17.26 $21.42 $17.13
====== ====== ====== ======
TOTAL RETURN FOR THE PERIOD^
(without deduction of sales load) 27.68% 5.13% 27.95% 4.34%
TOTAL NET ASSETS (000 omitted) $9,243 $995 $9,693 $1,181
INCOME FROM INVESTMENT OPERATIONS
Net investment income/(loss) (0.07)^^ (0.26)^^ (0.04)^^ (0.37)^^
Net realized and unrealized gain/(loss)
on investments 4.82 1.10 4.80 1.08
------ ------ ------ ------
Total from investment operations 4.75 0.84 4.76 0.71
------ ------ ------ ------
LESS DISTRIBUTIONS
Dividends from net investment income -- -- -- --
Distributions from net realized gains (0.47) (0.15) (0.47) (0.15)
------ ------ ------ ------
Total distributions (0.47) (0.15) (0.47) (0.15)
------ ------ ------ ------
RATIOS TO AVERAGE NET ASSETS
Expenses* 2.88% 5.13%++ 2.74% 7.15%++
Net investment income (0.34)% (2.74)%++ (0.23)% (4.77)%++
Portfolio turnover rate 20% 29% 20% 29%
</TABLE>
^ Total return calculated for a period less than one year is not annualized.
^^ For the years ended 31st December 1996, 1997, 1998 and 1999, net
investment income per share has been determined based on the weighted
average shares outstanding method.
^^^ The inception dates for Class B and C were 26th May, 1998.
* The ratio of expenses to average net assets for the year ended 31st December
1996 includes amounts paid through expense offset arrangements. Prior and
subsequent period ratios exclude these amounts.
** In the absence of expense reimbursement expenses on a annualized would have
represented 6.16% and 4.73% of the average net assets basis respectively,
for the years ended 31st December 1996 and 1995.
+ Period from 12th May, 1995 (inception) to 31st December, 1995.
++ Annualized.
49
----
GAM FUNDS INC PROSPECTUS / FINANCIAL HIGHLIGHTS
<PAGE>
GAM FUNDS, INC. - PURCHASE APPLICATION
Please mail in the enclosed envelope to: GAM Funds, Inc., c/o Boston Financial
Data Services, P.O. Box 9137, Boston, MA 02205-9775 (66 Brooks Drive, Braintree,
MA 02184-3839 for express mail services) with your check or money order payable
to "GAM Funds, Inc." To make payment by wire, please notify Boston Financial
Data Services at (800) 426-4685 or (617) 483-5000 of the incoming wire and to
receive a wire reference number. Instruct your bank to wire the funds with the
assigned reference number to: State Street Bank and Trust Company, ABA#
011000028 for account of GAM ["Fund Name"] Fund Subscription DDA #9905-414-0.
- --------------------------------------------------------------------------------
ACCOUNT REGISTRATION
- --------------------------------------------------------------------------------
n 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.
n 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.
n 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.
n INSTITUTIONAL REGISTRATIONS should be in the name of the institution, and an
officer should sign, indicating corporate or partnership office or title,
this application.
n 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
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
INVESTOR(S) INFORMATION OWNER JOINT OWNER
Name _________________________________________________ _________________________________________________
Address _________________________________________________ _________________________________________________
_________________________________________________ _________________________________________________
City/State/Zip _________________________________________________ _________________________________________________
Taxpayer ID/Social
Security Number _________________________________________________ _________________________________________________
Date of Birth _________________________________________________ _________________________________________________
Daytime Phone (______)_________________________________________ _________________________________________________
E-Mail Address _________________________________________________ _________________________________________________
</TABLE>
- --------------------------------------------------------------------------------
INVESTMENT SELECTION
- --------------------------------------------------------------------------------
The minimum initial investment is $5,000 per fund and subsequent investments are
$100 per fund.
INVESTMENT CLASS CLASS CLASS CLASS
AMOUNT A B C D
GAM Global Fund: $___________________ o o o o
GAM International Fund: $___________________ o o o o
GAM Pacific Basin Fund: $___________________ o o o o
GAM Japan Capital Fund: $___________________ o o o
GAM Europe Fund: $___________________ o o o
GAM North America Fund: $___________________ o o o
GAMerica Capital Fund: $___________________ o o o
GAM Money Market Account: $___________________ o o o o
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:
o Pay dividends in cash o Pay capital gains distributions in cash
<PAGE>
- --------------------------------------------------------------------------------
INVESTMENT ADVISOR/BROKER (IF APPLICABLE)
- --------------------------------------------------------------------------------
Representative's Name__________________________________________________________
Representative's Number_________________________________________________________
Representative's Phone Number (______)__________________________________________
Firm Name ______________________________________________________________________
Branch Address _________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
Branch Number __________________________________________________________________
- --------------------------------------------------------------------------------
ADDITONAL FEATURES AVAILABLE
- --------------------------------------------------------------------------------
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.
o Telephone Exchange -- Exchange shares of any Fund for shares of any other
Fund in the same class.
o 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_______________________________________________________________________
Name on Account_________________________________________________________________
Bank Address____________________________________________________________________
ABA #___________________________________________________________________________
Account # ______________________________________________________________________
________________________________________________________________________________
* 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.
Fund Investment Amount Monthly or Quarterly
______________________ $______________________ o o
______________________ $______________________ o o
Bank Name_______________________________ ABA #*_________________________________
Name on Account_________________________ Account #______________________________
Bank Address (City, State Only)_________________________________________________
* The ABA # is the nine-digit number that precedes your account number along
the bottom of your check.
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.
Choose One
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Fund Withdrawal Amount Monthly Quarterly Semi-annually Annually
________________________ $______________________ o o o o
________________________ $______________________ o o o o
</TABLE>
o Credit to bank account as designated under Wire Transfer or o 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)
o 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:
o $100,000 o $300,000 o $600,000 o $1,000,000
<PAGE>
RIGHT OF ACCUMULATION (OPTIONAL)
o 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
o Check here if eligible for waiver of sales load. (Reason must be stated or
sales load will be incurred.)
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 Boston Financial Data
Services 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______________________________
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 Boston Financial Data Services
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 Boston
Financial Data Services 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 Boston
Financial Data Services your attorney to surrender for redemption any or all
escrowed shares with full power of substitution in the premises.
<PAGE>
MORE INFORMATION ABOUT THE FUNDS
THE FUNDS' STATEMENT OF ADDITIONAL INFORMATION (SAI) gives more detailed
information about the Funds, and is incorporated by reference into this
prospectus.
ANNUAL AND SEMI-ANNUAL REPORTS published for each of these Funds describe in
detail the Funds' performance and the market conditions and investment
strategies that contributed to that performance.
FOR COPIES OF SAIS OR ANNUAL REPORTS FREE OF CHARGE, CALL THE FUNDS AT THE
TELEPHONE NUMBER BELOW, OR...
o Go to the Public Reference Room of the Securities and Exchange Commission.
o Call the SEC at (800) SEC-0330, or write to them at the Public Reference
Room, Washington, D.C. 20549-6009, and ask them to send you a copy. There is
a fee for this service.
o Download documents from the SEC's Internet website at http://www.sec.gov
GIML has authorized the use of information in this Prospectus, and only the
information in this prospectus, as an accurate representation of the Funds
offered in this Prospectus. This Prospectus may not be used or regarded as an
offer of the Funds in any jurisdiction where (or to any person for whom) such an
offer would be unlawful.
GAM FUNDS, INC.
135 East 57th Street
New York, NY 10022
Tel: (800) 426-4685 Fax: (212) 407-4684
Internet: http://www.gam.com
================================================================================
SEC Registration Number: 002-92136
<PAGE>
GLOBAL ASSET MANAGEMENT(R)
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, 2000
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 ("GIML").
Fayez Sarofim & Co. ("Sarofim") serves as co-investment adviser to the GAM North
America Fund. (GIML and Sarofim are collectively referred to as the "Investment
Advisers"). GAM Services, Inc. ("GAM Services"), an affiliate of GIML, 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 EUROPE FUND invests primarily in Europe.
GAM NORTH AMERICA FUND invests primarily in the United States and
Canada.
GAMERICA CAPITAL FUND invests 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, 2000, which can be obtained without
cost upon request at the address indicated above.
The Funds' 1999 Annual Report to Shareholders is incorporated by
reference in this Statement of Additional Information.
INVESTMENTS IN THE FUNDS ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY, ANY BANK, AND ARE NOT FEDERALLY INSURED BY THE FEDERAL DEPOSIT
INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER AGENCY.
INVESTMENTS IN THE FUNDS INVOLVE INVESTMENT RISKS, INCLUDING THE POSSIBLE LOSS
OF PRINCIPAL.
<PAGE>
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVE AND STRATEGIES..........................................
Rating of Securities.........................................................
United States Government Obligations.........................................
Repurchase Agreements........................................................
Options......................................................................
Stock Index Futures and Options..............................................
Interest Rate Futures and Options............................................
Foreign Currency Transactions................................................
Lending Portfolio Securities.................................................
Warrants.....................................................................
Borrowing....................................................................
Short-Selling................................................................
Restricted Securities........................................................
Future Developments..........................................................
Fundamental Investment Restrictions..........................................
Non-Fundamental Investment Restrictions......................................
Risk Considerations..........................................................
Policy of Concentration for GAM Pacific Basin Fund...........................
Portfolio Turnover...........................................................
MANAGEMENT OF THE COMPANY....................................................
Compensation of Directors and Executive Officers ............................
Principal Holders of Securities..............................................
INVESTMENT ADVISORY AND OTHER SERVICES ......................................
Investment Advisers .........................................................
Investment Advisory Contracts ...............................................
Advisory Fees................................................................
Principal Underwriter and Plans of Distribution .............................
Custodian and Administrator .................................................
Transfer Agent...............................................................
Legal Counsel................................................................
Independent Accountants .....................................................
Reports to Shareholders......................................................
BROKERAGE ALLOCATION ........................................................
Affiliated Transactions......................................................
SHAREHOLDER INFORMATION .....................................................
Sales Charge Reductions and Waivers .........................................
Waivers of Front-End Sales Charges ..........................................
Contingent Deferred Sales Charge Waivers.....................................
Conversion Feature...........................................................
NET ASSET VALUE, DIVIDENDS AND TAXES.........................................
Net Asset Value..............................................................
Suspension of the Determination of Net Asset Value...........................
Tax Status...................................................................
PERFORMANCE INFORMATION......................................................
DESCRIPTION OF SHARES........................................................
FINANCIAL STATEMENTS.........................................................
2
<PAGE>
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVE AND STRATEGIES
- --------------------------------------------------------------------------------
The investment objective and strategies of each Fund are described in
the Prospectus under the "Risk and Return Summary" heading. Set forth below is
additional information with respect to the investment objective and strategies
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.
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 debt securities (bonds and notes) in which the Funds may
invest are not required to have any rating. 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.
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 Standard & Poor's Corporation ("S&P") or lower than Baa
by Moody's Investors Services, Inc. ("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. A decrease in the
ratings 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 securities.
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 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.
3
<PAGE>
OPTIONS. 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.
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. A Fund may invest up
to 5% of its net assets in options on securities or indices including options
traded in over-the-counter markets.
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.
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
4
<PAGE>
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.
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 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
5
<PAGE>
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 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.
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.
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
6
<PAGE>
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 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.
SHORT-SELLING. GAM International Fund and GAM Global Fund may from time
to time engage in short selling of securities. Short selling is an investment
technique wherein the Fund sells a security it does not own anticipating a
decline in the market value of the security. To complete the transaction, the
Fund must borrow the security to make delivery to the buyer. The Fund is
obligated to replace the security borrowed by purchasing it subsequently at the
market price at the time of replacement. The price at such time may be more or
less than the price at which the security was sold by the Fund, which would
result in a loss or gain. Until the security is replaced, the Fund is required
to pay to the lender amounts equal to any dividends or interest which accrue
during the period of the loan. To borrow the security, the Fund also may be
required to pay a premium, which would increase the cost of the security sold.
The proceeds of the short sale will be retained by the broker, to the extent
necessary to meet margin requirements, until the short position is closed out.
The Fund will incur a loss as a result of the short sale if the price of the
security increases between the date of the short sale and the date on which the
Fund replaces the borrowed security. The Fund will realize a gain if the
security declines in price between those dates. This result is the opposite of
what one would expect from a purchase of a long position in a security. The
amount of any gain will be decreased, and the amount of any loss increased, by
the amount of any premium or amounts in lieu of dividends or interest the Fund
may be required to pay in connection with a short sale.
Short sales by the Fund involve risk. If the Fund incorrectly predicts
that the price of the borrowed security will decline, the Fund will have to
replace the securities sold short with securities with a greater value than the
amount received from the sale. As a result, losses from short sales may be
unlimited, whereas losses from long positions can equal only the total amount
invested.
7
<PAGE>
GAM International Fund and GAM Global Fund may also make short sales
"against the box." A short sale "against the box" is a transaction in which the
Fund enters into a short sale of a security which the Fund owns. The proceeds of
the short sale are held by a broker until the settlement date at which time the
Fund delivers the security to close the short position. The Fund receives the
net proceeds from the short sale.
Until the Fund replaces a borrowed security in connection with a short
sale, the Fund will: (a) maintain daily a segregated account, containing cash,
U.S. government securities, or certain liquid assets, at such a level that (i)
the amount deposited in the account plus the amount deposited with the broker as
collateral will equal the current value of the security sold short and (ii) the
amount deposited in the segregated account plus the amount deposited with the
broker as collateral will not be less than the market value of the security at
the time it was sold short; or (b) otherwise cover its short position.
The Fund anticipates that the frequency of short sales will vary
substantially under different market conditions, and it does not intend that any
specified portion of its assets as a matter of practice will be in short sales.
As a matter of policy, the Board of Directors has determined that securities
will not be sold short if, after effect is given to any such short sale, the
total market value of all securities sold short would exceed 20% of the value of
the Fund's net assets.
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"). If 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 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), except
that GAM Pacific Basin Fund will concentrate more than 25% of the value of its
total assets in the finance sector, as such sector is defined in the Morgan
Stanley Capital International ("MSCI") Indices. SEE "POLICY OF CONCENTRATION FOR
GAM PACIFIC BASIN FUND" BELOW.
8
<PAGE>
(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.
(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 Board of 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. This
restriction does not apply to GAM International Fund and GAM Global Fund. SEE
"Short-Selling" above for a further discussion. (Management may recommend to the
Board of Directors removal of this restriction for the other Funds).
(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. Investments in the Funds are not deposits or
obligations of, or guaranteed or endorsed by, any bank, including UBS AG or any
of its affiliates and are not insured or guaranteed by the Federal Deposit
Insurance Corporation, the Federal Reserve Board, or any other government
agency. Investments in the Funds involve investment risks, including the
possible loss of principal.
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 in foreign countries are generally subject to
different economic, financial, political and social factors than prices of
securities of United States issuers.
9
<PAGE>
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 payment position.
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.
POLICY OF CONCENTRATION FOR GAM PACIFIC BASIN FUND. Since GAM Pacific
Basin Fund has a fundamental policy to concentrate its investments in the
financial services sector, it may be subject to greater share price fluctuations
than a non-concentrated fund. There is a risk that the Fund's concentration in
the securities of financial services companies will expose the Fund to the price
movements of companies in one industry more than a more broadly diversified
mutual fund. Because GAM Pacific Basin Fund invests primarily in one sector,
there is the risk that the Fund will perform poorly during a downturn in that
sector. Also, businesses in the finance sector may be affected more
significantly by changes in government policies and regulation, interest rates,
currency exchange rates, and other factors affecting the financial markets. The
finance sector is defined by the MSCI to include the following industries:
banking; financial services; insurance and real estate.
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.
10
<PAGE>
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.
- --------------------------------------------------------------------------------
MANAGEMENT OF THE COMPANY
- --------------------------------------------------------------------------------
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 or shares of a Fund. The Board elects the officers of the Company and
retains various companies to carry out Fund operations, including the investment
advisers, custodian, administrator and transfer agent.
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* (65) 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 (80) Chairman, Latin American Advisory Board of
Director Coca-Cola International, 1988 to present.
2601 South Bayshore Drive Director, Emigrant Savings Bank, Director, BEA
Suite 1109 Associates, Brazilian Equity Fund, Chile Fund,
Coconut Grove, FL 33133 Latin American Investment Fund, South America
Fund, Latin American Equity Fund, Emerging
Markets Telecommunications Fund, Emerging
Markets Infrastructure Fund, and Fundacion
Chile, 1989 to present. Director, six Credit
Suisse Asset Management, LLC ("CSAM"), formerly
known as BEA Associates advised investment
companies. Former President, Americas Society
and the Council of the Americas, 1985-1993.
Robert J. McGuire (63) Attorney/Consultant, Morvillo, Abramowitz,
Director Grand, Iason & Silberberg, P.C., 1998 to
1085 Park Avenue present; Director, Emigrant Savings Bank,
New York, NY 10128 1999 to present; Director, BEA Associates,
Brazilian Equity Fund, 1998 to present.
President/Chief Operating Officer, Kroll
Associates 1989-1997.
Roland Weiser (67) 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).
* Mr. de Botton is a director who is an "interested person" of the Company
within the definitions set forth in the Act.
11
<PAGE>
Name and Address:
Position(s) Held Principal Occupation(s)
With the Company During Past Five Years
- ------------------------ -----------------------
Kevin J. Blanchfield (45) Chief Operating Officer, Treasurer and
Vice President/Treasurer Assistant Secretary, Global Asset Management
135 East 57th Street (USA) Inc., GAM Investments, Inc. and
New York, NY 10022 GAM Services Inc., 1993 to present; Senior Vice
President Finance and Administration, Lazard
Freres & Co., 1991 to 1993.
Joseph J. Allessie (34) General Counsel and Corporate Secretary ,
Corporate Secretary Global Asset Management (USA) Inc., GAM
135 East 57th Street Investments Inc. and
New York, NY 10022 GAM Services, Inc. 1999 to present;
Regulatory Officer to State of
New Jersey, Department of Law and Public
Safety, Bureau of Securities, 1993-1999.
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS. Each independent
Director of the Company receives annual compensation from the Company of $25,000
per year plus $1,000 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 With From the Part of Company Upon and Fund Complex
The Company Company Expenses Retirement Paid to Directors
- -------------------- ------------ ---------------- --------------- -----------------
<S> <C> <C> <C> <C>
Gilbert de Botton $ 0 N/A N/A $ 0
Director and
President
George W. Landau $31,000 N/A N/A $31,000
Director
Robert J. McGuire $31,000 N/A N/A $31,000
Director
Roland Weiser $31,000 N/A N/A $31,000
Director
</TABLE>
PRINCIPAL HOLDERS OF SECURITIES. As of January 31, 2000, 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. To the knowledge of the Funds, as
of January 31, 2000, no Shareholders owned beneficially (b) or of record (r)
more than 5% of a Fund's outstanding shares, except as set forth below. Prior to
December 17, 1999, Mr. Gilbert de Botton, President and Director of the Company,
may be deemed to have had 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 GIML, or by employee benefit plans for the
benefit of employees of GIML and its affiliates, as a result of the indirect
ownership of interests in GIML and its affiliates by a trust of which Mr. de
Botton was a potential beneficiary. Mr. de Botton disclaims beneficial ownership
of such shares.
12
<PAGE>
INTERNATIONAL
NAME AND ADDRESS Class A Class B Class C Class D
------- ------- ------- -------
Charles Schwab & Co., Inc 15.55%(r)
FBO Customers
101 Montgomery St.
San Francisco, CA
94104
Merrill Lynch 12.63%(r) 21.93%(r) 29.68%(r) 13.42%(r)
FBO Customers of MLPF&S
4800 Deer Lake Dr. East
Jacksonville, FL
32246
Enele Co 5.03%(r)
FBO Smith Barney Accts
c/o Copper Mountain Trust
601 SW 2nd Ave-Ste 1800
Portland, OR 97204-3154
GLOBAL
NAME AND ADDRESS Class A Class B Class C Class D
------- ------- ------- -------
Charles Schwab & Co., Inc 11.66%(r)
FBO Customers
101 Montgomery St.
San Francisco, CA
94104
Merrill Lynch 19.02%(r) 21.45%(r) 34.36%(r) 23.10%(r)
FBO Customers of MLPF & S
4800 Deer Lake Dr. East
Jacksonville, FL
32246
<TABLE>
<CAPTION>
PACIFIC BASIN NORTH AMERICA
NAME AND ADDRESS Class A Class B Class C Class D Class A Class B Class C
------- ------- ------- ------- ------- ------- -------
<S> <C> <C>
Charles Schwab & Co., Inc 22.42%(r) 27.34%(r)
FBO Customers
101 Montgomery St.
San Francisco, CA
94104
</TABLE>
13
<PAGE>
<TABLE>
<CAPTION>
PACIFIC BASIN NORTH AMERICA
NAME AND ADDRESS Class A Class B Class C Class D Class A Class B Class C
------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
FISERV Securities Inc. 10.37%(r)
FAO Customers
One Commerce Square
2005 Market Street
Suite 1200
Philadelphia, PA
19103
c/o Fiduciary Tr Company 10.64%(r)
Intl
Dengel & Co
P O Box 3199
Church Street Station
New York, NY 10008-3199
Merrill Lynch 58.44%(r) 26.63% 16.30%(r) 20.62%(r) 61.37%(r)
FBO Customers of
MLPF&S
4800 Deer Lake Dr. East
Jacksonville, FL
32246
Fayez Sarofim & Co. 13.83%(r)
PO Box 52830
Houston, TX
77052
Jan I. Shrem and 5.87%(b)
Mitsuko Shrem
C/O Rothschild Bank
Zollickstrasse 181
CH-8034 Zurich
SWITZERLAND
Donaldson Lufkin Jenrette 5.89%(r)
Securities Corporation
Inc.
PO Box 2052
Jersey City, NJ
07303
</TABLE>
14
<PAGE>
<TABLE>
<CAPTION>
PACIFIC BASIN NORTH AMERICA
NAME AND ADDRESS Class A Class B Class C Class D Class A Class B Class C
------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Salomon Smith Barney Inc
FBO Customer
333 W. 34th St. 5.53%(r)
3rd Fl
New York, NY 10001
JAPAN CAPITAL EUROPE
NAME AND ADDRESS Class A Class B Class C Class A Class B Class C
------- ------- ------- ------- ------- -------
Charles Schwab & Co., Inc 23.58%(r) 34.91%(r)
FBO Customers
101 Montgomery St.
San Francisco, CA
94104
Citibank Switzerland 11.10%(r)
Attn Rowena Wollard
Seestr 25
8021 Zurich Switzerland
Merrill Lynch 5.56%(r) 36.71%(r) 16.97%(r) 10.79%(r) 21.58%(r)
FBO Customer MLPF & S
4800 Deer Lake Dr. East
Jacksonville, FL
32246
</TABLE>
15
<PAGE>
<TABLE>
<CAPTION>
JAPAN CAPITAL EUROPE
NAME AND ADDRESS CLASS A CLASS B CLASS C CLASS A CLASS B CLASS C
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
FISERV Securities Inc. 7.78%(r)
One Commerce Square
2005 Market Street Ste.
1200
Philadelphia, PA
19103
Marian Peschel 12.53%(b)
Katarina Peschel
6830 Willow Lane
Minneapolis, MN
55430
Legg Mason Wood Walker 6.13%(r)
Inc
FBO Customer
P.O. Box 1476
Baltimore, MD
21202
</TABLE>
16
<PAGE>
<TABLE>
<CAPTION>
JAPAN CAPITAL EUROPE
NAME AND ADDRESS Class A Class B Class C Class A Class B Class C
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
NFSC 7.04%(r)
FBO Tien Li Chia
832 Hardwood Court
Gates Mills, OH
44040
Dain Rauscher Custodian 12.00%(r)
Barbara A. Lippke
2600 Fairview Avenue E7
Seattle, WA 98102
PaineWebber 7.37%(r)
FBO Robert Gery
The Tunix Club
Tolland, MA
01034
Smith Barney Inc. 5.14%(r) 10.52%(r)
FBO Customer
388 Greenwich St.
New York, NY 10013
Lehman Brothers 19.70%(r)
FBO 834 21861 14
PO Box 29198
Brooklyn, NY 11202
Donaldson Lufkin & 6.46%(r)
Jenrette Securities
Corporation Inc
PO Box 2052
Jersey City, NJ
07303-2052
Shahrzad Khayami 5.31%(r)
188 E. 70th St.-Apt 29B
New York, NY 10021-5170
</TABLE>
17
<PAGE>
<TABLE>
<CAPTION>
JAPAN CAPITAL EUROPE
NAME AND ADDRESS Class A Class B Class C Class A Class B Class C
------- ------- ------- ------- ------- -------
<S> <C>
Jan I. Shrem and 5.85%(r)
Mitsuko Shrem
C/O Rothschild Bank
Zollickstrasse 181
CH-8034 Zurich
SWITZERLAND
Post Co AC 974792 5.34%(r)
c o The Bank of NY
Mutual Fund Reorg Dept
PO Box 1066
Wall Street Station
New York, NY 10268-1066
</TABLE>
GAMERICA
NAME AND ADDRESS CLASS A CLASS B CLASS C
------- ------- -------
Charles Schwab & Co., Inc 26.97%(r)
FBO Customers
101 Montgomery St.
San Francisco, CA
94104
Merrill Lynch 5.12%(r) 23.36%(r) 14.21%(r)
FBO Customers of MLPF&S
4800 Deer Lake Dr. East
Jacksonville, FL
32246
Smith Barney Inc. 5.54%(r)
FBO Customer
388 Greenwich St.
New York, NY 10013
- --------------------------------------------------------------------------------
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. GIML is
controlled by and under common control with other investment advisers (as
described below) which have substantial experience managing foreign mutual
funds.
18
<PAGE>
The Directors of GIML and their principal occupations are as follows:
Name and Position Held
With Investment Adviser Principal Occupation
- ----------------------- --------------------
Gilbert M. de Botton See "Management of the Company"
above.
Jean-Philippe Cremers, Director. Investment Director, GIML
Gordon D. Grender, Director. Investment Director, GIML
Paul S. Kirkby, Director. Investment Director, GIML
Alan McFarlane, Director. Managing Director (Institutional),
Global Asset Management Limited
(London)
David J. Miller, Director. Finance Director of Global Asset
Management (U.K.) Ltd.
Denis Graham Raeburn, Director. Director, GAML and Managing
Director, Global Asset Management
(U.K.) Ltd.
Count Ulric E. von Rosen, Director. President, Bonnier Medical Division
of Bonnier Medical Group, Sweden
GIML 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 GIML through its wholly owned
subsidiaries, Greenpark Management N.V., Global Asset Management GAM SARL and
GAMAdmin B.V. (the latter of which is the direct parent of Global Asset
Management (U.K.) Limited). Global Asset Management Ltd. is wholly owned by UBS
AG, a banking corporation organized under the laws of Switzerland. UBS AG, with
headquarters in Switzerland, is an internationally diversified organization with
operations in many aspects of the financial services industry. UBS AG operates
in over 50 countries, has more than 48,000 employees and was formed by the
merger of Union Bank of Switzerland and Swiss Bank Corporation in June 1998. UBS
AG also maintains direct and indirect subsidiaries in the United States,
including Warburg Dillon Read LLC, an investment bank and broker-dealer; UBS
Brinson Inc. and Brinson Partners Inc., investment advisers; and Warburg Futures
Inc., a futures commission merchant and broker-dealer. Among UBS AG's direct and
indirect affiliates and related persons are various foreign broker-dealers,
investment advisers and banking organizations.
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 Unitrin, Inc., Argonaut
Group, and Kinder Morgan, Inc., each of which is a publicly traded corporation
with principal offices in the United States. Mr. Sarofim is a past director of
Teledyne, Inc., Allegheny Teledyne, Inc., MESA, Inc., Imperial Holly Corp., EXOR
Group, Alley Theatre, Houston Ballet Foundation and the Museum of Fine Arts
Houston.
INVESTMENT ADVISORY CONTRACTS. On December 17, 1999, UBS AG acquired
all the outstanding shares of Global Asset Management Ltd. (the "Acquisition").
19
<PAGE>
Global Asset Management Ltd. indirectly wholly owns GIML, an Investment Adviser
to the Funds. The Acquisition resulted in a change of control of GIML. Thus,
pursuant to the Act, prior to the completion of the Acquisition, the Board of
Directors considered the continuance of the then current Amended and Restated
Investment Advisory Contract dated April 14, 1994 (the "GIML Contract") with
GIML as an Investment Adviser to the Funds. The Board of Directors on September
29, 1999 (including a majority of the Directors who were not parties to the GIML
Contract or interested persons of any such party) approved the continuance of
the GIML Contract on behalf of each Fund, which approval was further ratified by
the Board (including a majority of the Directors who were not parties to the
GIML Contract or interested persons of any such party) on behalf of each Fund on
October 27, 1999. The shareholders of each Fund approved the continuance of the
GIML Contract on October 26, 1999. As such, a new Amended and Restated
Investment Advisory Contract (hereinafter referred to as the "GIML Contract")
was executed upon completion of the Acquisition, December 17, 1999, with
identical terms and conditions as the original GIML Contract.
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 October 27, 1999
and by the shareholders of GAM North America Fund on April 14, 1994.
The GIML Contract and the Sarofim Contract will each continue in effect
from year to year 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 GIML Contract or the Sarofim Contract or interested persons
of any such party.
The GIML Contract requires GIML 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. GIML 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 GIML. Sarofim commenced providing investment advisory services
to GAM North America Fund on June 29, 1990.
The GIML 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
judgement, 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).
The Company acknowledges that it has obtained its corporate name by
consent of GIML and agrees that if (i) GIML should cease to be the Company's
investment adviser or (ii) Global Asset Management Ltd. should cease to own a
majority equity interest in GIML, the Company, upon request of GIML, 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 GIML is no longer the Company's investment
adviser. If GIML makes such request because Global Asset Management Ltd. no
longer owns a majority equity interest in GIML, the question of continuing the
GIML Contract must be submitted to a vote of the Company's shareholders. The
Company has agreed that GIML or any of its successors or assigns may use or
20
<PAGE>
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, GIML 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, GAMerica
Capital Fund and GAM Europe Fund during the quarter preceding each payment; and
GAM and Sarofim each receives a quarterly fee equal to 0.125 % 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, 1999, 1998 and 1997 are set forth below:
<TABLE>
<CAPTION>
Pacific Japan North GAMerica
Global International Basin Capital Europe America Capital
---------- ------------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
1999 $1,207,927 $21,736,189 $314,098 $419,808 $319,451 $353,149 $389,284
1998 $1,287,387 $26,355,350 $207,532 $280,165 $513,908 $160,274 $ 84,838
1997 $ 379,486 $14,631,974 $502,073 $293,314 $366,938 $ 85,196 $ 22,409
</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
CAPITAL CAPITAL
------- -------
Organizational Expenses $34,166 $30,036
Amortized over 5 years beginning 7/1/94 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 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.
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 GIML. Global Asset Management
Ltd. is wholly owned by UBS AG, a banking corporation organized under the laws
of Switzerland.
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
Regulation, 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
21
<PAGE>
charge on Class A and Class D shares to individual selling dealers. 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:
22
<PAGE>
<TABLE>
<CAPTION>
1999
(000's omitted)
CLASS A CLASS D
------------------------------- -----------------------------
After After
Aggregate Reallowance Aggregate Reallowance
---------- ----------- --------- -----------
<S> <C> <C> <C> <C>
GAM International Fund $1,344 $462 $178 $66
GAM Global Fund 77 24 19 9
GAM Pacific Basin Fund 43 23 4 2
GAM Japan Capital Fund 40 19 N/A N/A
GAM Europe Fund 19 10 N/A N/A
GAM North America Fund 39 12 N/A N/A
GAMerica Capital Fund 106 58 N/A N/A
</TABLE>
For the fiscal year ended December 31, 1999, GAM Services retained front-end
sales loads of $696,108 from the sale of Fund shares.
<TABLE>
<CAPTION>
1998
(000's omitted)
CLASS A CLASS D
------------------------------- -----------------------------
After After
Aggregate Reallowance Aggregate Reallowance
---------- ----------- --------- -----------
<S> <C> <C> <C> <C>
GAM International Fund $ 11,229 $ 2,895 $ 2,096 $653
GAM Global Fund 1,623 406 238 77
GAM Pacific Basin Fund 74 19 21 6
GAM North America Fund 44 14 N/A N/A
GAM Europe Fund 239 62 N/A N/A
GAM Japan Capital Fund 160 40 N/A N/A
GAMerica Capital Fund 113 31 N/A N/A
For the fiscal year ended December 31, 1998, GAM Services retained front-end
sales loads of $4,221,836 from the sale of Fund shares.
1997
(000's omitted)
CLASS A CLASS D
------------------------------- -----------------------------
After After
Aggregate Reallowance Aggregate Reallowance
---------- ----------- --------- -----------
<S> <C> <C> <C> <C>
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 N/A N/A
GAM Europe Fund 35 13 N/A N/A
GAM Japan Capital Fund 267 76 N/A N/A
GAMerica Capital Fund 5 4 N/A N/A
</TABLE>
For the fiscal year ended December 31, 1997, GAM Services retained front-end
sales loads of $3,156,062 from the sale of Fund shares.
The aggregate dollar amount of contingent deferred sales charges paid
to and retained by the Distributor for the fiscal year ended December 31, 1999
is as follows:
23
<PAGE>
1999
Class A Class C Class D
-------- ------- -------
GAM International Fund $334,579 $203,978 $4,335
GAM Global Fund 4,895 15,900
GAM Pacific Basin Fund 100 449
GAM North America Fund 4 3,455
GAM Europe Fund 1,313 1,830
GAM Japan Capital Fund -- 9,002
GAMerica Capital Fund 4,272 5,984
For the fiscal year ended December 31, 1999, GAM Services received
contingent deferred sales loads of $590,096 from the redemption of Fund Shares.
Each Fund has adopted separate distribution Plans under Rule 12b-1 of
the 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 Fund
shares; 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 Board of 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 should 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 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 Fund
Directors or a majority of the outstanding shares of the 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, 1999 are as follows:
24
<PAGE>
<TABLE>
<CAPTION>
Class A Class B Class C Class D
------- ------- ------- -------
<S> <C> <C> <C> <C>
GAM International Fund $5,696,178 $679,368 $838,136 $591,404
GAM Global Fund $ 283,193 $ 98,428 $ 88,290 $ 38,331
GAM Pacific Basin Fund $ 82,314 $ 22,150 $ 5,879 $ 6,286
GAM Japan Capital Fund $ 117,877 $ 14,709 $ 13,323 N/A
GAM Europe Fund $ 88,644 $ 15,772 $ 7,314 N/A
GAM North America Fund $ 81,603 $ 29,165 $ 51,338 N/A
GAMerica Capital Fund $ 86,771 $ 42,753 $ 58,376 N/A
</TABLE>
CUSTODIAN AND ADMINISTRATOR. The Custodian, Administrator and Fund Accounting
Agent for the Company is Brown Brothers Harriman & Co., Private Bankers
("BBH&Co."), a New York Limited Partnership established in 1818. BBH&Co. has
offices worldwide and provides services to the Company from its offices located
at 40 Water Street, Boston, MA 02109. As Custodian, administrator and Fund
Accounting Agent, BBH&Co. is responsible for the custody of the Company's
portfolio securities and cash, maintaining the financial and accounting books
and records of the Company, computing the Company's net asset value per share
and providing the administration services required for the daily business
operations of the Company. For its services to the Company, BBH&Co. is paid a
fee based on the net asset value of each Fund and is reimbursed by the Company
for its disbursements, certain expenses and charges based on an out-of-pocket
schedule agreed upon by BBH&Co. and the Company from time to time.
For the fiscal years ended December 31, 1999, 1998 and 1997, BBH&Co. was paid
the following fees for its services as Administrator and Fund Accounting Agent:
1999 1998 1997
---------- ---------- ----------
GAM International Fund $1,571,000 $1,906,922 $1,463,486
GAM Global Fund 123,000 120,835 54,473
GAM Pacific Basin Fund 60,000 27,172 69,776
GAM North America Fund 55,208 23,568 9,841
GAM Japan Capital Fund 59,000 34,683 36,937
GAM Europe Fund 56,000 63,612 13,749
GAMerica Capital Fund 55,149 19,732 3,000
TRANSFER AGENT. Boston Financial Data Services, Inc. ("Boston
Financial"), 66 Brooks Drive, Braintree, Massachusetts 02184-3839, serves as
shareholder service agent, dividend-disbursing agent and transfer agent for the
Funds. Pursuant to an agreement between the Funds and State Street Bank and
Trust Company ("State Street"), State Street has delegated performance of its
services to Boston Financial. The Funds also engage other entities to act as
shareholder servicing agents and to perform subaccounting and administrative
services for the benefit of discrete groups of the Funds' shareholders.
LEGAL COUNSEL. Coudert Brothers, 1114 Avenue of the Americas, New York,
New York 10036, acts as legal counsel for the Funds and GIML.
INDEPENDENT ACCOUNTANTS. PricewaterhouseCoopers L.L.P., 1177 Avenue of
the Americas, New York, New York 10019-6013, are the independent accountants for
the Company for the fiscal year ending December 31, 1999. 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.
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.
CODE OF ETHICS. Pursuant to rule 17j-1 of the Act, the Investment
Advisers have each adopted a Code of Ethics which applies to the personal
trading activities of their employees. GIML's Code of Ethics applies to itself
and its affiliates, including the Company, and the Company's principal
underwriter. Sarofim adopted a Code which applies to itself and its affiliates.
Both Codes of Ethics establish standards for personal securities transactions by
employees covered under their respective Codes of Ethics. Under the Codes of
Ethics, employees have a duty at all times to place the interests of
shareholders above their own, and never to take inappropriate advantage of their
position. As such, employees are prohibited from engaging in, or recommending,
any securities transaction which involves any actual or potential conflict of
interest, or any abuse of an employee's position of trust and responsibility.
All employees of the Investment Advisers are prohibited from recommending
securities transactions by any Fund without disclosing his or her interest, and
are prohibited from disclosing current or anticipated portfolio transactions
with respect to any Fund to anyone unless it is properly within his or her
duties to do so. Employees who are also deemed investment personnel under the
GIML Code of Ethics or access persons under the Sarofim Code of Ethics, defined
as those persons who, in connection with his or her regular functions or duties,
makes, participates in, or obtains information regarding the purchase or sale of
a security by the Investment Adviser, or whose functions relate to the making of
any recommendations with respect to such purchases or sales, are also prohibited
from: participating in initial public offerings or private placements which
present conflicts of interest with the Funds; and engaging in any securities
transaction for their own benefit or the benefit of others, including the Funds,
while in possession of material, non-public information concerning such
securities. All portfolio managers and investment related staff of GIML are
required to notify their local compliance officer in advance of any personal
dealings in securities which they intend to carry out and are not permitted to
deal personally in securities within seven working days (either in advance or
retrospectively) of carrying out any transaction in the same security on behalf
of the Fund(s) they manage. All Sarofim employees are required to receive prior
approval of all personal securities transactions, which approval will be denied
where there appears a conflict of interest between the employee and a client
including the Fund, managed by Sarofim.
The Investment Advisers have established under their respective Codes of Ethics
compliance procedures to review the personal securities transactions of their
associated persons in an effort to ensure compliance with their respective Codes
of Ethics in accord with rule 17j-1 of the Act.
Copies of the Codes of Ethics are on file with and publicly available from the
SEC.
25
<PAGE>
- --------------------------------------------------------------------------------
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, 1999, 1998 and 1997 are set forth below:
<TABLE>
<CAPTION>
Pacific North Japan GAMerica
International Global Basin Europe America Capital Capital
------------- -------- -------- -------- ------- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
1999 $9,826,623 $349,742 $171,526 $226,651 $23,995 $126,241 $54,371
1998 $6,155,942 $385,674 $109,176 $407,460 $20,784 $53,902 $11,605
1997 4,380,158 151,482 238,964 137,778 4,728 159,168 346
</TABLE>
AFFILIATED TRANSACTIONS. With effect of the Acquisition, the Company is
an indirect wholly owned subsidiary of UBS AG. UBS AG, a banking organization,
with headquarters in Switzerland, is an internationally diversified organization
with operations in many aspects of the financial services industry. Among UBS
AG's direct and indirect affiliates and related persons are various
broker-dealers to include direct and indirect subsidiaries in the United States
including Warburg Dillon Read LLC, an investment bank and broker-dealer and UBS
Warburg Futures Inc., a futures commission merchant and broker-dealer. Among UBS
AG's direct and indirect affiliates and related persons are various foreign
broker-dealers to include UBS AG London, an affiliated broker-dealer. As such,
when buying or selling securities, the Fund may pay commissions to brokers who
are affiliated with the Investment Advisers in accordance with procedures
adopted by the Board of Directors. The Fund may purchase securities in certain
underwritten offerings for which an affiliate of the Fund or the Investment
Adviser may act as an underwriter. The Fund may effect future transactions
through, and pay commissions to, futures commission merchants who are affiliated
with the Investment Advisers or the Fund in accordance with procedures adopted
by the Board of Directors.
From the date of the "Acquisition" through the fiscal year ended
December 31, 1999, the Fund did not pay any brokerage commissions to any
affiliated broker-dealer.
26
<PAGE>
- --------------------------------------------------------------------------------
SHAREHOLDER INFORMATION
- --------------------------------------------------------------------------------
The Company offers A,B,C, and D Class Shares. Each Class involves different
sales charges, features and expenses as described more fully in the Prospectus.
SALES CHARGE REDUCTIONS AND WAIVERS
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.
CONTINGENT DEFERRED SALES CHARGE WAIVERS. A contingent deferred sales
charge ("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 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;
27
<PAGE>
(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; and
(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.
CONVERSION FEATURE. 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 as more
fully described in the Prospectus. 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 "How to Exchange Shares" in the Prospectus), 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.
- --------------------------------------------------------------------------------
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.
28
<PAGE>
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.
- --------------------------------------------------------------------------------
PERFORMANCE INFORMATION
- --------------------------------------------------------------------------------
The average annual total return of each Fund for the periods ended
December 31, 1999 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.
29
<PAGE>
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN (%)
- ------------------------------------------------------------------------------------------
10 YRS (OR SINCE 5 YRS 1 YR TO
INCEPTION) TO DEC. TO DEC. 31, DEC. 31,
31, 1999 1999 1999
- ------------------------------------------------------------------------------------------
With Without With Without With Without
FUND sales sales sales sales sales sales
CLASS (INCEPTION DATE) load load load load load load
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
GAM INTERNATIONAL FUND
Class A 1/02/85 13.52 14.10 14.78 15.96 1.64 6.99
Class B 5/26/98 (4.50) (2.04) 1.25 6.25
Class C 5/19/98 (0.61) (0.61) 5.32 6.32
Class D 9/18/95 12.94 13.88 3.08 6.82
</TABLE>
30
<PAGE>
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN (%)
- ------------------------------------------------------------------------------------------
10 YRS (OR SINCE 5 YRS 1 YR TO
INCEPTION) TO DEC. TO DEC. 31, DEC. 31,
31, 1999 1999 1999
- ------------------------------------------------------------------------------------------
With Without With Without With Without
FUND sales sales sales sales sales sales
CLASS (INCEPTION DATE) load load load load load load
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
GAM GLOBAL FUND
Class A 5/28/86 12.24 12.82 18.20 19.42 8.52 14.23
Class B 5/26/98 (0.51) 1.98 8.34 13.34
Class C 5/19/98 1.66 1.66 12.25 13.25
Class D 10/6/95 14.97 15.94 9.96 13.94
GAM EUROPE FUND
Class A 1/01/90 7.60 8.15 17.17 18.37 10.40 16.21
Class B 5/26/98 (0.10) 2.02 9.49 14.48
Class C 5/20/98 1.58 1.58 12.11 13.11
GAM PACIFIC BASIN FUND
Class A 5/06/87 7.26 7.81 3.06 4.12 66.16 74.91
Class B 5/26/98 35.90 37.98 62.90 67.89
Class C 6/01/98 32.89 32.89 62.15 63.15
Class D 10/18/95 2.89 3.77 67.64 73.71
GAM JAPAN CAPITAL
Class A 7/01/94 10.45 11.48 12.41 13.57 77.71 87.05
Class B 5/26/98 39.37 41.41 77.18 82.18
Class C 5/19/98 40.76 40.76 82.31 83.30
GAM NORTH AMERICA
Class A 1/01/90 14.57 15.16 23.09 24.36 3.85 9.32
Class B 5/26/98 8.92 11.06 2.82 7.82
Class C 7/07/98 5.83 5.83 7.02 8.02
GAMERICA CAPITAL FUND
Class A 5/12/95 23.23 24.60 22.52 28.97
Class B 5/26/98 17.96 20.22 22.68 27.68
Class C 5/26/98 19.80 19.80 26.94 27.95
</TABLE>
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 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.
31
<PAGE>
- --------------------------------------------------------------------------------
DESCRIPTION OF SHARES
- --------------------------------------------------------------------------------
GAM Funds, Inc., a Maryland corporation, was organized on May 7, 1984.
The Company has seven series of common stock outstanding, each of which may be
divided into four classes of shares, Class A, 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.
Each share outstanding is entitled to share equally in dividends and
other distributions and in the net assets of the respective series on
liquidation. Shares are fully paid and non-assessable when issued, freely
transferable, have no pre-emptive or subscription rights, and are redeemable and
subject to redemption under certain conditions described above. The Funds do not
generally issue certificates for shares purchased.
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.
- --------------------------------------------------------------------------------
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
The audited financial statements of each Fund for the fiscal year ended
December 31, 1999 and the report of the Funds' independent accountants in
connection therewith are included in the 1999 Annual Report to Shareholders and
are incorporated by reference in this Statement of Additional Information.
32
<PAGE>
PART C
OTHER INFORMATION
ITEM 23. EXHIBITS.
(a)(1) 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").
(a)(2) 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.
(a)(3) 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.
(a)(4) 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").
(a)(5) Articles Supplementary adding GAM Mid-Cap U.S. Fund are
incorporated by reference to PEA 27.
(a)(6) 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 by reference to Post Effective No. 30.
(a)(7) Articles Supplementary to Registrant's Article of
Incorporation reallocating shares due to the closing of GAM
Asian Capital Fund are attached herewith.
<PAGE>
(b)(1) 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").
(b)(2) Amended By-Laws of Registrant are attached herewith.
(c) Not Applicable.
(d)(1) Amended and Restated Investment Advisory Agreement with GAM
International Management Limited, dated April 14, 1994, is
incorporated by reference to PEA No. 27.
(d)(2) 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.
(d)(3) 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.
(d)(4) 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.
(d)(5) Investment Advisory Agreement with Forstmann-Leff Associates
Inc., dated August 17, 1995, is incorporated by reference to
PEA 27.
(d)(6) Amendment No. 3 to Amended and Restated Investment Advisory
Agreement with GAM International Management Limited, dated
December 17, 1999, is attached herewith.
(e)(1) 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 ("PEA28").
(e)(2) First Amended Distribution Agreement For Class D Shares with
GAM Services, Inc., dated November 1, 1996, is filed
incorporated by reference to PEA 28.
(e)(3) Amended Form of Dealer Agreement between GAM Services, Inc.
and designated dealers is incorporated by reference to PEA 28.
(e)(4) Agreement for Distribution of Class B and Class C shares are
incorporated herein.
(f) Not Applicable.
(g) Custodian Agreement with Brown Brothers Harriman & Co., dated
April 26, 1995, is incorporated by reference to PEA 26.
(h)(1) 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.
(h)(2) Administration Agreement with Brown Brothers Harriman & Co.
dated October 1, 1995 is incorporated by reference to PEA 28.
(h)(3) Transfer Agency Agreement with Boston Financial Data Services,
Inc., is attached herewith.
(i) Not Applicable.
(j) Consent of PricewaterhouseCoopers is attached hereto as
Exhibit j.
(k) Not Applicable.
(l) 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.
(m)(1) 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.
(m)(2) Class A Distribution Plan adopted by the Registrant pursuant
to Rule 12b-1 under the 1940 Act is incorporated by reference
to PEA 28.
(m)(3) Class B and Class C Distribution Plans adopted by the
Registrant pursuant to Rule 12b-1 under the 1940 Act are
incorporated by reference hereto.
(n) Financial Data Schedules attached hereto.
(o)(1) 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.
(o)(2) 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 by reference.
(p) Powers of Attorney for Mr. Landau, Mr. McGuire, Mr. Weiser,
and Mr. de Botton are attached hereto as Exhibit p.
(q)(1) Global Asset Management Code of Ethics pursuant to Rule 17j-1
of the Investment Company Act of 1940, are attached herewith.
(q)(2) Fayez Sarofim & Co. and Affiliates Code of Ethics pursuant to
Rule 17j-1 of the Investment Company Act of 1940 are attached
herewith.
ITEM 24. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT.
N/A
ITEM 25. 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 26. 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.
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 Lilmited, 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 27. PRINCIPAL UNDERWRITERS.
(a) None.
(b)
Positions and Name and Positions and
Offices with Principal Offices with
Registrant Business Address Underwriter
- --------------------------------------------------------------------------------
Vice President Kevin J. Blanchfield Chief Operating Officer,
and Treasurer 135 East 57th Street Treasurer
New York, NY 10022 and Director
Secretary Joseph J. Allessie Secretary
135 East 57th Street
New York, NY 10022
(c) N/A
<PAGE>
ITEM 28. 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) Boston Financial Data Services
31a - 1(b)(2)(iv) PO Box 8264
Boston, MA 02266
31a - 1(b)(9)-(11) GAM International Management Limited
12 St. James's Place
London SW1A 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 29. N/A
ITEM 30. UNDERTAKINGS
N/A
<PAGE>
SIGNATURES
Pursuant to the requirements of (the Securities Act and) the Investment
Company Act, the Fund has duly caused this registration statement to be signed
on its behalf by the undersigned, duly authorized, in the City of New York, and
State of New York on the 29th day of February 2000.
GAM Funds, Inc.
Registrant
By /s/ Kevin J. Blanchfield
--------------------
Kevin J. Blanchfield
Vice President and Treasurer
Pursuant to the requirements of the Securities Act, this registration
statement has been signed below by the following persons in the capacities and
on the date(s) indicated.
- --------------------------------------------------------------------------------
(Signature) (Title) (Date)
SIGNATURES
Signature Title: Date
- --------------------------------------------------------------------------------
/s/ Gilbert de Botton* President and February 29, 2000
- ------------------------ Director
Gilbert de Botton
(Principal Executive Officer)
/s/ Kevin J. Blanchfield Vice President/ February 29, 2000
- ------------------------ Treasurer
Kevin J. Blanchfield (Principal
Financial and
Accounting Officer)
/s/ Roland Weiser* Director February 29, 2000
- ------------------------
Roland Weiser
/s/ George W. Landau* Director February 29, 2000
- ------------------------
George W. Landau
/s/ Robert J. McGuire Director February 29, 2000
- ------------------------
Robert J. McGuire
*By: /s/ Kevin J. Blanchfield
- -----------------------------
Executed by Kevin J. Blanchfield on behalf of those indicated pursuant to Powers
of Attorney which are attached hereto as Exhibit p.
<PAGE>
EXHIBIT
INDEX
(a)(7) Articles supplementary
(b)(2) Amended By-Laws
(d)(6) Amended and Restated Investment Advisory Agreement
(h)(3) Transfer Agency Agreement
(j) Consent of Independent Auditors PricewaterhouseCoopers dated
April 30, 2000.
(n) Financial Data Schedule
(p) Powers of Attorney
(q)(i) Code of Ethics for Global Asset Management (USA) Inc.
(q)(2) Code of Ethics for Fayez Sarofim & Co. and affiliates.
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) of the Articles of Incorporation, which reads as follows:
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 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.
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
<PAGE>
-2-
($.001) each, and of which Six Hundred Seventeen
Million Five Hundred Thousand (617,500,000) 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, Zero (0)
are designated GAM Asian Capital Fund Common Stock, and
Forty Million (40,000,000) are designated GAM Emerging
Markets Capital Fund Common Stock.
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
28, 1999. 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 1,550,000,000 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 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
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 Capital Fund - Class A 10,000,000 shares
GAM Developing Markets Capital Fund - Class B 10,000,000 shares
GAM Developing Markets Capital Fund - Class C 10,000,000 shares
GAM Developing Markets Capital Fund - Class D 10,000,000 shares
<PAGE>
-4-
FOURTH: The Board of Directors of the Corporation at a meeting duly
convened and held on April 28, 1999 adopted a resolution authorizing the
reallocation of Seventy-Two Million Five Hundred Thousand (72,500,000) shares
from GAM Asian Capital Fund " Class A, B, C, and D to GAM International Fund "
Class C. Such resolution changed the designation and classification of the
Common Stock as follows:
Number of Shares of
Common Stock Previously
Name of Series Classified 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 147,500,000 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
<PAGE>
-5-
Number of Shares of
Common Stock Previously
Name of Series Classified and Allocated
-------------- ------------------------
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
GAMerica Capital Fund - Class D 25,000,000 shares
GAM Developing Markets Capital Fund - Class A 10,000,000 shares
GAM Developing Markets Capital Fund - Class B 10,000,000 shares
GAM Developing Markets Capital Fund - Class C 10,000,000 shares
GAM Developing Markets Capital 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, B, C and Class D
Common Stock retain all of the same rights and privileges as they had before
adoption of the resolution.
FIFTH: 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.
SIXTH: These Articles of Amendment shall become effective on the date
that they are accepted for record by the State of Maryland.
<PAGE>
-6-
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: /s/ Kevin J. Blanchfield
------------------------------
Kevin J. Blanchfield
Vice President
ATTEST:
/s/ Teresa B. Riggin
- -----------------------------
Teresa B. Riggin
Assistant Secretary
Exhibit 23(b)(2)
SECOND AMENDED AND
RESTATED BY-LAWS
OF
GAM FUNDS, INC.
BY-LAW ONE: OFFICES
ARTICLE 1.1. OFFICES. GAM Funds, Inc. (the "Fund") shall maintain a
principal office in the State of Maryland as required by law. The Fund may also
have an office or offices at such other place or places, within or without the
State of Maryland, as the Board of Directors may from time to time designate.
BY-LAW TWO: STOCKHOLDERS
ARTICLE 2.1. PLACE OF MEETINGS. All meetings of the stockholders shall
be held at such place within the United States, whether within or outside the
State of Maryland, as the Board of Directors shall determine, which shall be
stated in the notice of the meeting, or in a duly executed waiver of notice
thereof.
ARTICLE 2.2. ANNUAL MEETING. No annual meeting of the stockholders of
the Fund shall be held unless required by applicable law or otherwise called by
the Board of Directors.
ARTICLE 2.3. SPECIAL MEETINGS. Special meetings of the stockholders for
any purpose or purposes, unless otherwise prescribed by statute or by the
Articles of Incorporation, may be called by resolution of the Board of Directors
or by the President. Business transacted at special meetings shall be confined
to the subjects stated in such call.
ARTICLE 2.4. NOTICE. Written notice of every meeting of stockholders,
stating the time when and the place where it is to be held, and, in the case of
a special meeting, the purpose or purposes for which the meeting is called,
shall be served, either personally or by mail, not less than ten nor more than
ninety days before the meeting, upon each stockholder as of the record date
fixed for the meeting and who is entitled to vote at such meeting. If mailed (1)
such notice shall be directed to a stockholder at his address as it shall appear
on the books of the Fund (unless he shall have filed with the Transfer Agent of
the Fund a written request that notices intended for him be mailed to some other
address, in which case it shall be mailed to the
<PAGE>
address designated in such request) and (2) such notice shall be deemed to have
been given as of the date when it is deposited in the United States mail with
first class postage thereon prepaid. Irregularities in the notice or in the
giving thereof, as well as the accidental omission to give notice of any meeting
to, or the non-receipt of any such notice by, any of the stockholders shall not
invalidate any action otherwise properly taken by or at any such meeting.
ARTICLE 2.5. QUORUM. The holders of a majority of the stock issued and
outstanding and entitled to vote thereat, present in person or represented by
proxy, shall be requisite and shall constitute a quorum at all meetings of the
stockholders for the transaction of business except as otherwise provided by
law, by the Articles of Incorporation or by these By-Laws. If a quorum shall not
be present or represented, the stockholders entitled to vote thereat, present in
person or represented by proxy, shall have the power to adjourn the meeting from
time to time, without notice other than announcement at the meeting, until a
quorum shall be present or represented. At such adjourned meeting at which a
quorum shall be present or represented, any business may be transacted which
might have been transacted at the meeting as originally notified.
ARTICLE 2.6. VOTE OF THE MEETING. When a quorum is present or
represented at any meeting, the vote of the holders of a majority of the stock
having voting power present in person or represented by proxy shall decide any
question brought before such meeting, unless the question is one upon which a
different vote is required by express provisions of law, the Articles of
Incorporation or these By-Laws, in which case express provisions shall govern
and control the decision of such question. At any meeting of stockholders held
for the election of directors, a plurality of all the votes cast shall be
sufficient to elect a director.
ARTICLE 2.7. PROXIES. Every proxy must be executed in writing by the
stockholder or by his duly authorized attorney-in-fact. No proxy shall be valid
after the expiration of eleven months from the date of its execution unless it
shall have specified therein its duration. Every proxy shall be revocable at the
pleasure of the person executing it or of his personal representatives or
assigns, unless otherwise provided therein. At all meetings of stockholders,
unless the voting is conducted by inspectors, all questions relating to the
qualification of voters and the validity or proxies and the acceptance or
rejection of votes shall be decided by the chairman of the meeting.
ARTICLE 2.7(I). PROXY VOTING BY ELECTRONIC MEANS. Proxy dissemination
and voting is permitted and authorized by any electronic or telecommunications
devices, or in any other similar manner, to the fullest extent permitted under
Maryland law.
ARTICLE 2.8. ACTION WITHOUT A MEETING. Any action required or permitted
to be taken at any meeting of stockholders may be taken without a meeting is (i)
a consent in writing, setting forth such action, is signed by all the
stockholders entitled
<PAGE>
to vote on the subject matter thereof and (ii) any other stockholders entitled
to notice of a meeting of stockholders but not to vote thereat have waived in
writing any rights which they may have to dissent from such action and such
consent and waiver are filed with the records of stockholder meetings.
BY-LAW THREE: DIRECTORS
ARTICLE 3.1. SIZE OF BOARD OF DIRECTORS. The Board of Directors shall
consist of not less than three nor more than fifteen directors, all of whom
shall be of full age. A majority of the entire Board of Directors may alter the
number of directors within the aforementioned limits, but such action shall not
affect the tenure of office of any director. Directors shall be elected as
required by applicable law, and each director shall serve until his successor is
duly qualified. Directors need not be stockholders. If the number of directors
is increased, the additional directors may be elected by a majority of the
entire Board of Directors, except as otherwise provided by law, and shall serve
until their successors are duly qualified.
ARTICLE 3.2. VACANCIES. Except as otherwise provided by law, if the
office of any director or directors becomes vacant for any reason (other than
increase in the number of places on the Board as provided in Article 3.1
herein), the majority of the remaining directors, whether or not sufficient to
constitute a quorum, may fill a vacancy on the Board of Directors by a majority
vote, and the successor or successors shall hold office, and serve until a
successor or successors qualify.
ARTICLE 3.3. MAJORITY TO BE ELECTED BY STOCKHOLDERS. If at any time
less than a majority of the directors in office shall consist of directors
elected by stockholders, or if a majority of the directors holding office at the
beginning or any twelve month period shall have died, resigned or otherwise
vacated their office, a meeting of the stockholders shall be called within sixty
days for the purpose of electing an entire new Board of Directors (unless the
Securities and Exchange Commission shall by order extend such period), and the
terms of office of the directors then in office shall terminate upon the
election and qualification of such new Board of Directors.
ARTICLE 3.4. POWERS OF THE BOARD OF DIRECTORS. The business of this
Fund shall be managed under the direction of its Board of Directors, which may
exercise all such powers of the Fund and do all such lawful acts and things as
are not required by law, by the Articles of Incorporation or by these By-Laws to
be exercised or done by the stockholders.
ARTICLE 3.5. PLACES OF MEETINGS. The directors may hold their meetings
at the principal office of the Fund or at such other places, either within or
without the State of Maryland, as they may from time to time determine.
<PAGE>
ARTICLE 3.6. REGULAR MEETINGS. Regular meetings of the Board of
Directors may be held without notice at such date and time as shall from time to
time be determined by resolution of the Board of Directors.
ARTICLE 3.7. SPECIAL MEETINGS. Notice of the place and time of every
special meeting of the Board of Directors shall be served on each director or
sent to him by telegraph or by mail, or by leaving the same at his residence or
usual place of business, at least one day before the date of the meeting. If
mailed, such notice shall be deemed to be given when deposited in the United
States mail addressed to the director at his post-office address as it appears
on the records of the Fund, with postage thereof prepaid. Special meetings will
be called by the President or Secretary, in a like manner, on the written
request of two directors.
ARTICLE 3.8. QUORUM. At all meetings of the Board of Directors the
presence of one-third of the entire number of directors then in office (but not
less than two directors) shall be necessary to constitute a quorum and
sufficient for the transaction of business, and any act of a majority present at
a meeting, at which there is a quorum, shall be the act of the Board of
Directors, except as may be otherwise specifically provided by law, by the
Articles of Incorporation or by these By-Laws. If a quorum shall not be present
at any meeting of the Board of Directors, the directors present thereat may
adjourn the meeting from time to time, without notice other than announcement at
the meeting, until a quorum shall be present.
ARTICLE 3.9. INFORMAL ACTION BY DIRECTORS AND COMMITTEES. Any action
required or permitted to be taken at any meeting of the Board of Directors or
any Committee of the Board of Directors may, except as otherwise required by
law, be taken without a meeting if a written consent to such action is signed by
all members of the Board of Directors, or of such Committee, as the case may be,
and filed with the minutes of the proceedings of the Board of Directors or of
such Committee. Subject to the Investment Company Act of 1940, as amended,
members of the Board of Directors or a Committee thereof may participate in a
meeting by means of a conference telephone or similar communications equipment,
providing all persons participating in the meeting can hear each other at the
same time.
ARTICLE 3.10. EXECUTIVE COMMITTEE. There may be an Executive Committee
of two or more directors appointed by the Board of Directors who may meet at
stated times or on notice given to all by any of their own number. The members
of the Executive Committee shall consult with and advise the officers of the
Fund in the management of its business and exercise such powers of the Board of
Directors as may be lawfully delegated by the Board of Directors. The members of
the Executive Committee present at any meeting, whether or not they constitute a
quorum, may appoint another director to act in the place of an absent member.
Vacancies shall be filled by the Board of Directors at any regular or special
meeting. The Executive Committee shall keep regular minutes of its proceedings
and report the same to the Board of Directors when required.
<PAGE>
ARTICLE 3.11. OTHER COMMITTEES. The Board of Directors may appoint
other committees which shall in each case consist of such number of members (not
less than two), and shall have and may exercise, to the extent permitted by law,
such powers, as the Board of Directors may determine in the resolution
appointing them. A majority of all members of any such committee may determine
its action, and fix the time and place of its meetings, unless the Board of
Directors shall otherwise provide. The members of any such Committee present at
any meeting, whether or not they constitute a quorum, may appoint another
director to act in the place of an absent member. The Board of Directors shall
have power at any time to change the members and, to the extent permitted by
law, the powers of any such committee, to fill vacancies, and to discharge any
such committee. Each committee shall keep regular minutes of its proceedings and
report the same to the Board of Directors when required.
ARTICLE 3.12. COMPENSATION OF DIRECTORS. The directors may be paid, by
resolution of the Board of Directors, their expenses, if any, of attendance at
each meeting of the Board of Directors. A director may be paid, by resolution of
the Board of Directors, a fixed sum for attendance at each meeting of the Board
of Directors or a stated salary as director, or both such fixed sum and stated
salary, in such amounts as are determined by the Board of Directors. No such
payment shall preclude any director from serving the Fund in any other capacity
and receiving compensation therefor. Members of committees may be paid, by
resolution of the Board of Directors, like compensation for attending committee
meetings.
ARTICLE 3.13. REMOVAL OF DIRECTORS. At any meeting of the stockholders,
duly called and at which a quorum is present, the stockholders may, by the
affirmative vote of the holders of a majority of the votes entitled to be cast
thereon, remove any director or directors from office and may elect a successor
or successors to fill any resulting vacancies for the unexpired terms of such
removed director or directors.
BY-LAW FOUR: OFFICERS
ARTICLE 4.1. OFFICERS. The officers of the Fund shall consist of a
President, one or more Vice-Presidents (any of whom may be designated a Senior
Vice President), a Secretary and a Treasurer. Any two of the aforesaid offices,
except those of a President and Vice-President, may be held by the same person,
but no officer shall execute, acknowledge or verify any instrument in more than
one capacity if such instrument is required by law, the Articles of
Incorporation or these By-Laws to be executed, acknowledged or verified by two
or more officers.
ARTICLE 4.2. APPOINTMENT OF OFFICERS. The directors shall appoint from
their number a President, and shall also choose the other officers who need not
be members of the Board of Directors.
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ARTICLE 4.3. SALARIES OF OFFICERS. The salaries of all officers of the
Fund shall be fixed by the Board of Directors.
ARTICLE 4.4. ADDITIONAL OFFICERS. The officers of the Fund shall be
determined by the Board of Directors. The Board of Directors, at any regular or
special meeting, may appoint such other officers and agents as it shall deem
necessary who shall exercise such powers and perform such duties as shall be
determined from time to time by the Board of Directors.
ARTICLE 4.5. TERM, REMOVAL, VACANCIES. The officers of the Fund shall
hold office for one year and until their successors are duly chosen and
qualified. Any officer elected or appointed by the Board of Directors may be
removed at any time by the affirmative vote of a majority of the directors. If
the office of any officer becomes vacant for any reason, the vacancy may be
filled by the Board of Directors.
ARTICLE 4.6. PRESIDENT. The President (who may also be President of the
Fund's investment manager) shall preside at meetings of the stockholders and of
the Board of Directors unless the directors elect a Chairman of the Board, in
which event the President shall only preside in the absence of the Chairman. The
President shall be in charge of the management of the business of the Fund and
shall see that all orders and resolutions of the Board of Directors are carried
into effect.
ARTICLE 4.7. VICE-PRESIDENTS. The Vice President (who may also be an
officer or director of the Fund's investment manager), in the absence or
disability of the President, shall perform the duties and exercise the powers of
the President and shall perform such other duties as the Board of Directors
shall prescribe.
ARTICLE 4.8. TREASURER. The Treasurer shall have the custody of the
corporate funds and securities and shall keep full and accurate accounts of
receipts and disbursements in books belonging to the Fund and shall deposit all
moneys and other valuable effects in the name and to the credit of the Fund in
such depositories as may be designated by the Board of Directors. He shall
disburse the funds of the Fund as may be ordered by the Board of Directors,
taking proper vouchers for such disbursements, and shall render to the President
and directors at the regular meetings of the Board of Directors, or whenever
they may require it, an account of all his transactions as Treasurer and of the
financial condition of the Fund.
If required by the Board of Directors, the Treasurer shall give the
Fund a bond in such sum and with such surety or sureties as shall be
satisfactory to the Board of Directors for the faithful performance of the
duties of his office and for the restoration to the Fund, in case of his death,
resignation, retirement or removal from office, of all books, papers, vouchers,
money and other property of whatever kind in his possession or under his control
belonging to the Fund.
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ARTICLE 4.9. SECRETARY. The Secretary shall attend meetings of the
stockholders and of the Board of Directors and record all votes and the minutes
of all proceedings in a book to be kept for that purpose, and shall perform like
duties for the Executive Committee (if any) of the Board when required. He shall
give or cause to be given notice of all meetings of stockholders and special
meetings of the Board of Directors and shall perform such other duties as may be
prescribed by the Board of Directors. He shall keep in safe custody the seal of
the Fund and affix it to any instrument when authorized by the Board of
Directors.
ARTICLE 4.10. ASSISTANT OFFICERS. Notwithstanding anything express or
implied to the contrary in the foregoing provisions of By-Law Four, the
President at any time may appoint any Assistant Vice Presidents and, if not
previously appointed by the Board of Directors, an Assistant Secretary and an
Assistant Treasurer, as he shall deem necessary. Such officers as are appointed
by the President pursuant to the authority conferred hereby are hereinafter
collectively referred to as "Assistant Officers."
A. Assistant Officers shall hold office for such time as determined by
the President and may be removed at any time by the President or the Board of
Directors.
B. The duties of Assistant Officers shall be as follows:
(1) The Assistant Vice President shall have such duties as the
President or Board of Directors shall prescribe.
(2) The Assistant Treasurer shall assist the Treasurer and act in the
Treasurer's behalf at the direction of the Treasurer or whenever the Treasurer
shall be unavailable to act and shall have such other duties as the President or
Board of Directors shall prescribe.
(3) The Assistant Secretary shall assist the Secretary and act in the
Secretary's behalf at the direction of the Secretary or whenever the Secretary
shall be unavailable to act and have such other duties as the President or Board
of Directors shall prescribe.
BY-LAW FIVE: GENERAL PROVISIONS
ARTICLE 5.1. WAIVER OF NOTICE. Whenever the stockholders or the Board
of Directors are authorized by law, the Articles of Incorporation or these
By-Laws, to take any action after notice, such notice may be waived, in writing,
before or after the holding of the meeting, by the person or persons entitled to
such notice or, in the case of a stockholder, by his attorney duly authorized
thereunto.
<PAGE>
ARTICLE 5.2. CHECKS. All checks or demands for money and notes of the
Fund shall be signed by such officer or officers or such other person or persons
as the Board of Directors may from time to time designate.
ARTICLE 5.3. FISCAL YEAR. The fiscal year of the Fund shall be
determined by resolution of the Board of Directors.
ARTICLE 5.4. SEAL. The seal of the Fund shall be circular in form and
contain the name of the Fund, the year of its organization and the words
"Corporate Seal, Maryland." The seal may be used by causing it to be impressed
directly on the instrument or writing to be sealed, or upon adhesive substance
affixed thereto. The seal on any corporate obligation for the payment of money
may be a facsimile, engraved or printed.
BY-LAW SIX: CERTIFICATES OF STOCK
ARTICLE 6.1. CERTIFICATES OF STOCK OR BOOK SHARES. The certificates of
stock of the Fund shall be numbered and entered in the books of the Fund as they
are issued. They shall exhibit the holder's name and the number of whole shares
and shall be signed by the President or a Vice-President and the Treasurer or an
Assistant Treasurer or the Secretary or an Assistant Secretary, and shall bear
the corporate seal. Such seal may be a facsimile, engraved or printed. Where any
such certificate is signed by a Transfer Agent or by a Registrar, the signatures
of any such officer may be a facsimile, engraved or printed. In case any of the
officers of the Fund whose manual or facsimile signature appears on any stock
certificate delivered to a Transfer Agent of the Fund shall cease to be such
officer prior to the issuance of such certificate, the Transfer Agent may
nevertheless countersign and deliver such certificate as though the person
signing the same or whose facsimile signature appears thereon had not ceased to
be such officer, unless written instructions of the Fund to the contrary are
delivered to the Transfer Agent.
Notwithstanding the foregoing, the issue of whole and/or fractional
shares of the Fund's stock may be in all respects validly effected and evidenced
for all purposes without certificates by means of book entries recorded and
maintained by the Fund's Transfer Agent in the Fund's stock register.
ARTICLE 6.2. LOST CERTIFICATES. The Board of Directors, President,
Treasurer or Secretary may direct a new certificate or certificates to be issued
in place of any certificate or certificates theretofore issued by the Fund and
alleged to have been lost or destroyed, upon the making of an affidavit of that
fact by the person claiming the certificate of stock to be lost or destroyed.
When authorizing such issue of a new certificate or certificates, the Board of
Directors, President, Treasurer or Secretary may, as a condition precedent to
the issuance thereof, require the owner of such lost or destroyed certificate or
certificates, or his legal representative, to advertise the same in such manner
as it or they shall require and/or give the Fund a bond in such
<PAGE>
sum and with such surety or sureties as it or they may direct as indemnity
against any claim that may be made against the Fund with respect to the
certificate alleged to have been lost or destroyed.
ARTICLE 6.3. TRANSFER OF STOCK. Upon surrender to the Fund or the
Transfer Agent of the Fund of a certificate of stock or stock power or letter of
instructions duly endorsed or accompanied by proper evidence of succession,
assignment or authority to transfer, it shall be the duty of the Fund to issue a
new certificate to the person entitled thereto, or to record such transfer as
book shares upon the Fund's stock register and in the name of such person, and
to cancel the old certificate. Every such transfer of stock shall be entered in
the stock book of the Fund.
ARTICLE 6.4. REGISTERED HOLDER. The Fund shall be entitled to treat the
holder of record of any share or shares of stock as the holder in fact thereof
and, accordingly, shall not be bound to recognize any equitable or other claim
to or interest in such share or shares on the part of any other person whether
or not it shall have express or other notice thereof, except as expressly
provided by law.
ARTICLE 6.5. RECORD DATE. The Board of Directors may fix a time not
less than ten nor more than ninety days prior to the date of any meeting of
stockholders, or prior to the date of any meeting of stockholders, or prior to
the last day on which the consent or dissent of stockholders may be effectively
expressed for any purpose without a meeting, as the time as of which
stockholders entitled to notice of and to vote at such a meeting or whose
consent or dissent is required or may be expressed for any purpose, as the case
may be, shall be determined; and all persons who were holders of record of
voting stock at such time and no other shall be entitled to notice of and to
vote at such meeting or to express their consent or dissent, as the case may be.
The Board of Directors may also fix a time not exceeding ninety days preceding
the date fixed for the payment of any dividend or the making of any
distribution, or for the delivery of evidences of rights, or evidences of
interests arising out of any change, conversion or exchange of capital stock, as
a record time for the determination of the stockholders entitled to receive any
such dividend, distribution, rights or interests.
ARTICLE 6.6. STOCK LEDGER. The Fund shall maintain at the office of its
Transfer Agent an original or duplicate stock ledger containing the names and
addresses of all stockholders and the number of shares of each class held by
each stockholder. Such stock ledger may be in written form or any other form
capable of being converted into written form within a reasonable time for visual
inspection.
BY-LAW SEVEN: ANNUAL STATEMENT
ARTICLE 7.1. ANNUAL STATEMENT. The President or a Vice-President or
Treasurer shall prepare, or cause to be prepared, annually a full and correct
statement of the affairs of the Fund, including a balance sheet and a financial
statement of
<PAGE>
operations for the preceding fiscal year, which shall be submitted at the annual
meeting and shall be filed within twenty days thereafter at the principal office
of the Fund in the State of Maryland.
BY-LAW EIGHT: AMENDMENTS
ARTICLE 8.1. BY DIRECTORS. The directors shall have the power by
majority vote of the entire Board of Directors at any meeting thereof to make,
adopt, alter or repeal any By-Law without the approval of the stockholders.
BY-LAW NINE: INDEMNIFICATION
ARTICLE 9.1. INDEMNIFICATION OF DIRECTORS AND OFFICERS. The Fund shall
indemnify its directors to the fullest extent that indemnification of directors
is permitted by the Maryland General Corporation Law. The Fund shall indemnify
its officers to the same extent as its directors and to such further extent as
is consistent with law. The Fund shall indemnify its directors and officers who
while serving as directors or officers also serve at the request of the Fund as
a director, officer, partner, trustee, employee, agent or fiduciary of another
corporation, partnership, joint venture, trust, other enterprise or employee
benefit plan to the extent consistent with law. The indemnification and other
rights provided by this By-Law shall continue as to a person who has ceased to
be a director or officer and shall inure to the benefit of the heirs, executors,
and administrators of such a person. This By-Law shall not protect any such
person against any liability to the Fund or any stockholder thereof to which
such person would otherwise be subject by reason of wilful misfeasance, bad
faith, gross negligence or reckless disregard of the duties involved in the
conduct of his office ("disabling conduct").
ARTICLE 9.2. ADVANCES. Any current or former director of the Fund
seeking indemnification within the scope of this By-Law shall be entitled to
advances from the Fund for payment of the reasonable expenses incurred by him in
connection with the matter as to which he is seeking indemnification in the
manner and to the fullest extent permissible under the Maryland General
Corporation Law. The person seeking indemnification shall provide to the Fund a
written affirmation of his good faith belief that the standard of conduct
necessary for indemnification by the Fund has been met and a written undertaking
to repay any such advance if it should ultimately be determined that the
standard of conduct has not been met. In addition, at least one of the following
additional conditions shall be met: (a) the person seeking indemnification shall
provide a security in form and amount acceptable to the Fund for his
undertaking; (b) the Fund is insured against losses arising by reason of the
advance; or (c) a majority of a quorum of directors of the Fund who are neither
"interested persons" as defined in Section 2(a)(19) of the Investment Company
Act of 1940, as amended, nor parties to the proceeding ("disinterested non-party
directors"), or independent legal counsel, in a written opinion, shall have
determined, based on a review of facts readily available to the Fund at the time
the advance is proposed to be
<PAGE>
made, that there is reason to believe that the person seeking indemnification
will ultimately be found to be entitled to indemnification.
ARTICLE 9.3. PROCEDURE. At the request of any person claiming
indemnification under this By-Law, the Board of Directors shall determine, or
cause to be determined, in a manner consistent with the Maryland General
Corporation Law, whether the standards required by this By-Law have been met.
Indemnification shall be made only following: (a) a final decision on the merits
by a court or other body before whom the proceeding was brought that the person
to be indemnified was not liable by reason of disabling conduct or (b) in the
absence of such a decision, a reasonable determination, based upon a review of
the facts, that the person to be indemnified was not liable by reason of
disabling conduct by (i) the vote of a majority of a quorum of disinterested
non-party directors or (ii) an independent legal counsel in a written opinion.
ARTICLE 9.4. INDEMNIFICATION OF EMPLOYEES AND AGENTS. Employees and
agents who are not officers or directors of the Fund may be indemnified, and
reasonable expenses may be advanced to such employees or agents, as may be
provided by action of the Board of Directors or by contract, subject to any
limitations imposed by the Investment Company Act of 1940.
ARTICLE 9.5. OTHER RIGHTS. The Board of Directors may make further
provision consistent with law for indemnification and advance of expenses to
directors, officers, employees and agents by resolution, agreement or otherwise.
The indemnification provided by this By-Law shall not be deemed exclusive of any
other right, with respect to indemnification or otherwise, to which those
seeking indemnification may be entitled under any insurance or other agreement
or resolution of stockholders or disinterested directors or otherwise.
ARTICLE 9.6. AMENDMENTS. References in this By-Law are to the Maryland
General Corporation Law and to the Investment Company Act of 1940 as from time
to time amended. No amendment of these By-Laws shall affect any right of any
person under this By-Law based on any event, omission or proceeding prior to the
amendment.
GAM FUNDS, INC.
GAM International Management Limited
12 St. James's Place
London SWIA 1NX
ENGLAND
AMENDED AND RESTATED INVESTMENT ADVISORY CONTRACT
Dear Sirs:
The undersigned, GAM Funds, Inc., a Maryland corporation (the "Fund"),
is an open-end diversified series investment company, registered under the
Investment Company Act of 1940, as amended (the "1940 Act"). This letter (the
"Contract") confirms your engagement as investment adviser to each series of the
Fund's shares presently authorized -- 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 -- on the terms and subject to the
conditions set forth below:
SECTION 1. INVESTMENT MANAGEMENT SERVICES
A. GENERAL
You shall conduct and maintain a continuous review of each
series' portfolio of securities and investments, and, except with respect to GAM
North America Fund, you shall make all decisions regarding purchases and sales
of securities and other investments on behalf of each series. On behalf of each
series other than GAM North America Fund, such services shall include, among
others, determining the portion of the assets of each series to be held in
United States and foreign issuers and entering into foreign exchange contracts
in connection therewith on behalf of each series, as you deem advisable.
With respect to GAM North America Fund, you shall provide to
Fayez Sarofim & Co. ("Sarofim") recommendations as to the purchase and sale of
securities, portfolio reviews, and investment research and advice with respect
to the securities and investments of GAM North America Fund.
In all instances, you shall be guided by the investment
objectives, policies and restrictions of each series as set forth in the
Prospectus and the Statement of Additional Information filed by the Fund with
<PAGE>
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the Securities and Exchange Commission, as amended from time to time (the
"Disclosure Documents"), in accordance with such other policies or limitations
adopted by the Board of Directors and the provisions of the 1940 Act and the
rules promulgated thereunder. We agree to supply you with all such relevant
documents and to notify you of any relevant changes in the Fund's investment
objectives, policies and restrictions.
In acting under this Agreement, you shall be an independent
contractor and shall not be an agent of the Fund.
B. SELECTION AND RECOMMENDATIONS OF BROKERS
With respect to each series of the Fund other than GAM North
America Fund, you shall be solely responsible for the selection of members of
securities exchanges, brokers and dealers for the execution of the portfolio
transactions of the Fund, and, when applicable, negotiating commissions in
connection therewith. With respect to GAM North America Fund, you shall make
recommendations to Sarofim as requested by Sarofim as to the selection of
members of securities exchanges, brokers and dealers for the execution of the
portfolio transactions of GAM North America Fund. All such selections and
recommendations shall be made in accordance with the Fund's policies and
restrictions regarding brokerage allocation set forth in the Disclosure
Documents.
You may, in making such brokerage selections and
recommendations and in negotiating commissions, take into account any services
or facilities provided by a broker. You are authorized to select or recommend a
member of a securities exchange or any other securities broker or dealer which
charges an amount of commission for effecting a securities transaction in excess
of the amount of commission another member of an exchange, broker or dealer
would have charged for effecting that transaction if you determine in good faith
that such amount of commission is reasonable in relation to the value of the
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")) provided by
such member, broker or dealer, viewed in terms of either that particular
transaction or your overall responsibility with respect to the accounts as to
which you exercise investment discretion (as that term is defined in Section
3(a)(35) of the 1934 Act).
C. REPORTS AND SUMMARIES
You shall maintain a continuous record of all the investments
and securities which comprise the portfolio of each series of the Fund, other
than GAM North America Fund, and shall furnish to the Fund or its designee such
summaries of each series' portfolio and such other reports, evaluations,
analyses and opinions, including statistical reports, relating to your services
as investment adviser hereunder as the Fund may reasonably request at any time
or from time to time or as you may deem helpful to the Fund. All such records
shall be the property of the Fund.
<PAGE>
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SECTION 2. EXPENSES
You shall assume and pay all of your own costs and expenses,
including those for furnishing such office space, office equipment, office
personnel and office services as you may require in the performance of your
duties under this Contract.
The Fund shall bear all expenses of its organization,
operations and business not expressly assumed or agreed to be paid by you under
this Contract. In particular, but without limiting the generality of the
foregoing, the Fund shall pay all interest, taxes, governmental charges or
duties, fees, brokerage and commissions of every kind arising hereunder or in
connection herewith, expenses of issue, repurchase or redemption of the Fund's
shares, expenses of registering, qualifying and pricing the Fund's shares for
sale, insurance, association membership dues, all charges of custodians
(including fees as custodian and for keeping books, performing portfolio
valuations and rendering other services to the Fund), transfer agents,
registrars, dividend disbursing agents, independent auditors and legal counsel,
expenses of preparing, printing and distributing all prospectuses, proxy
material, reports and notices to shareholders, all distribution expenses under
its Plan adopted in accordance with Rule 12b-1 under the 1940 Act, fees and
out-of-pocket expenses of directors, all overhead expenses of the Fund's
operations, including office space, office equipment, office personnel and
office services and all other costs incident to the Fund's corporate existence.
SECTION 3. USE OF SERVICES OF OTHERS
You may (at your expense except as set forth in Section 2
hereof) employ, retain or otherwise avail yourself of the services or facilities
of other persons or organizations for the purpose of providing you or the Fund
with such statistical or factual information, such advice regarding economic
factors and trends or such other information, advice or assistance as you may
deem necessary, appropriate or convenient for the discharge of your obligations
hereunder or otherwise helpful to the Fund.
SECTION 4. MANAGEMENT FEES
A. FEE RATE
In consideration of your services hereunder to each series of
the Fund other than GAM North America Fund, you shall be entitled to a
management fee, payable quarterly, equal to 0.25% of the average daily net
assets of each series of the Fund during the quarter preceding each payment
(equivalent to an annual fee of 1% of the average daily net assets of the Fund
during the year). The fee shall be accrued for each calendar day and the sum of
the daily fee accruals shall be paid quarterly to you on the first business day
of the next succeeding quarter. The daily fee accruals will be computed by
multiplying the fraction of one over the number of calendar days in the quarter
by 0.25% and multiplying this product by the net assets of each series of the
<PAGE>
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Fund as determined in accordance with the Fund's Prospectus as of the close of
business on the previous business day on which the Fund was open for business.
In consideration of your services hereunder to GAM North
America Fund, you shall be entitled to a management fee, payable quarterly,
equal to 0.125% of the average daily net assets of GAM North America Fund during
the quarter preceding each payment (equivalent to an annual fee of 0.5% of the
average daily net assets of GAM North America Fund during the year). The fee
shall be accrued for each calendar day and the sum of the daily fee accruals
shall be paid quarterly to you on the first business day of the next succeeding
quarter. The daily fee accruals will be computed by multiplying the fraction of
one over the number of calendar days in the quarter by 0.125% and multiplying
this product by the net assets of GAM North America Fund as determined in
accordance with the Fund's Prospectus as of the close of business on the
previous business day on which the Fund was open for business.
B. EXPENSE LIMITATION
In the event that the annual expenses of any series of the
Fund for all purposes (including the investment management fee), except taxes,
brokerage fees and commissions, distribution expenses and (with the consent of
the state securities administrators where necessary) extraordinary expenses such
as litigation, exceed the limits prescribed by any state in which the shares of
such series are qualified for sale, the amount of the fee payable by such series
to you will be reduced by the amount of any such excess. When the accrued amount
of such expenses exceeds the limits at month-end, the accrued amount of your fee
at month-end will be reduced by the amount of such excess, subject to adjustment
monthly during the balance of the Fund's fiscal year if accrued expenses
thereafter fall below the limit.
SECTION 5. LIMITATION OF LIABILITY OF INVESTMENT ADVISER
You shall be liable for losses resulting from your own acts or
omissions caused by your willful misfeasance, bad faith or gross negligence in
the performance of your duties hereunder or your reckless disregard of your
duties under this Contract, and nothing herein shall protect you against any
such liability to the Fund or its shareholders. You shall not be liable to the
Fund or to any shareholder of the Fund for any claim or loss arising out of any
investment or other act or omission, in the performance of your duties under
this Contract or for any loss or damage resulting from the imposition by any
government of exchange control restrictions which might affect the liquidity of
the 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.
<PAGE>
-5-
SECTION 6. SERVICES TO OTHER CLIENTS AND THE FUND
Nothing contained in this Contract shall be deemed to prohibit
you or any of your affiliated persons from acting, and being separately
compensated for acting, in one or more capacities on behalf of the Fund. We
understand that you may act as investment manager or in other capacities on
behalf of other investment companies and customers. While information and
recommendations you supply to the Fund and investments you make on behalf of the
Fund shall in your judgment be appropriate under the circumstances in light of
the investment objectives and policies of the Fund, it is understood and agreed
that they may be different from the information and recommendations you or your
affiliated persons supply to other clients. You and your affiliated persons
shall supply information, recommendations and any other services, and shall
allocate investment opportunities among each series of the Fund and any other
client, in an impartial and fair manner in order to seek good results for all
clients involved, but you shall not be required to give preferential treatment
to any one series of the Fund as compared with the treatment given to any other
series or to any other client. Whenever you shall act in multiple capacities on
behalf of the Fund, you shall maintain the appropriate separate accounts and
records for each such capacity. As used herein, the term "affiliated person"
shall have the meaning assigned to it in the 1940 Act.
On occasions when you deem the purchase or sale of a security
to be in the best interest of one or more of the Fund's series as well as other
customers, you may, to the extent permitted by applicable law, aggregate the
securities to be so sold or purchased in order to obtain the best execution or
lower brokerage commissions, if any. You may also on occasion purchase or sell a
particular security for one or more customers in different amounts. On either
occasion, and to the extent permitted by applicable law and regulations,
allocation of the securities so purchased or sold, as well as the expenses
incurred in the transaction, will be made by you in the manner you consider to
be the most equitable and consistent with your fiduciary obligations to each
series of the Fund and to such other customers.
SECTION 7. REPORTS TO INVESTMENT ADVISER
The Fund shall furnish to you solely for your use such
prospectuses, proxy statements, reports and other information relating to the
business and affairs of the Fund as you may, at any time or from time to time,
reasonably require in order to discharge your duties under this Contract.
SECTION 8. USE OF INVESTMENT ADVISER'S NAME
The Fund may use the names "GAM Funds, Inc.", "GAM
International Fund", "GAM Global Fund", "GAM Pacific Basin Fund", "GAM Europe
Fund", "GAM North America Fund", "GAM Japan Capital Fund", "GAMerica Capital
Fund" or any other name derived from the name "GAM" or "Global Asset Management"
only for so long as (i) this Contract or any extension, renewal or amendment
hereof remains in effect, (ii) a majority of your equity interest shall continue
to be owned by your corporate parent, Global Asset Management Ltd., or (iii) you
shall specifically consent in writing to such continued use. Any such use by the
Fund shall in no way prevent you or any of your successors or assigns from using
<PAGE>
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or permitting the use of the names GAM Funds, Inc., GAM International Fund, GAM
Global Fund, GAM Pacific Basin Fund, GAM Europe Fund, GAM North America Fund,
GAM Japan Capital Fund, GAMerica Capital Fund or any component or components
thereof, singly or in any combination, alone or with any other word or words,
for, by or in connection with any other entity or business, other than the Fund
or its businesses, whether or not the same directly or indirectly competes or
conflicts with the Fund or its business in any manner. To the extent permitted
by the 1940 Act and rules and regulations thereunder, and more particularly,
Investment Company Act Release No. 5510, dated October 8, 1968, in the event
that you shall cease to be the investment manager of the Fund or your corporate
parent shall no longer own a majority of your equity interest, the Fund, upon
your written request, shall submit to its shareholders for their vote a proposal
to amend its Charter to delete from its name the initials "GAM" and thereafter
(1) cease to use the names "GAM Funds, Inc.", "GAM International Fund", "GAM
Global Fund", "GAM Pacific Basin Fund", "GAM Europe Fund", "GAM North America
Fund", "GAM Japan Capital Fund", "GAMerica Capital Fund" or any component or
components thereof, singly or in any combination, or any name deceptively
similar to "Global Asset Management" or "GAM Funds", "GAM International", "GAM
Global", "GAM Pacific Basin", "GAM Europe", "GAM North America", "GAM Japan
Capital" or "GAMerica Capital Fund" in any way whatsoever, and (2) for such
period and in such manner as may reasonably be required by you, on all
letterheads and other material designed to be read or used by salesmen,
distributors or investors, state in a prominent position and prominent type that
GAM International Management Limited has ceased to be the investment manager of
the Fund, provided, however, that if you make such request because your parent
corporation no longer owns a majority of your equity interest, the question of
continuing the investment management agreement between you and the Fund must be
submitted to a vote of the shareholders of each series of the Fund at the time
of submission of the proposal to amend the Fund's name.
SECTION 9. TERM OF CONTRACT
This Contract shall be effective on December 17, 1999. This
Contract shall continue in effect from year to year with respect to each series,
subject to approval annually by the Board of Directors of the Fund or by vote of
a majority of the outstanding shares of each such series of the Fund (as defined
in the 1940 Act) and also, in either event, by the vote, cast in person at a
meeting called for the purpose of voting on such approval, of a majority of the
directors of the Fund who are not parties to this Contract or interested persons
(as defined in the 1940 Act) of any such person.
SECTION 10. TERMINATION OF CONTRACT; ASSIGNMENT
This Contract may be terminated with respect to each series by
either party hereto, without the payment of any penalty, upon 60 days' prior
notice in writing to the other party; provided, that in the case of termination
by the Fund, such action shall have been authorized by resolution of a majority
of the directors of the Fund in office at the time or by vote of a majority of
the outstanding shares of such series of the Fund (as defined by the 1940 Act).
<PAGE>
-7-
This Contract shall automatically terminate in the event of
its assignment (as defined in the 1940 Act). Termination of this Contract for
any reason shall not affect rights of the parties that have accrued prior
thereto.
SECTION 11. APPLICABLE PROVISIONS OF LAW
This Contract shall be subject to all applicable provisions of
law, including, without limitation, the applicable provisions of the 1940 Act,
and to the extent that any provisions herein contained conflict with any such
applicable provisions of law, the latter shall control.
If the above terms and conditions are acceptable to you,
please so indicate by signing and returning to us the enclosed copy of this
letter, whereupon this letter shall constitute a binding contract between us.
Very truly yours,
GAM FUNDS, INC.
By: /s/ KEVIN J. BLANCHFIELD
------------------------------
Authorized Signature
Accepted and Agreed:
GAM INTERNATIONAL MANAGEMENT LIMITED
By: /s/ DAVID J. MILLER
------------------------
Authorized Signature
TRANSFER AGENCY AND SERVICE AGREEMENT
between
GAM FUNDS, INC.
and
STATE STREET BANK AND TRUST COMPANY
<PAGE>
TABLE OF CONTENTS
PAGE
1. Terms of Appointment and Duties..................................1
2. Third Party Administrators for Defined Contribution Plans........4
3. Fees and Expenses................................................5
4. Representations and Warranties of the Transfer Agent.............5
5. Representations and Warranties of the Fund.......................5
6. Wire Transfer Operating Guidelines...............................6
7. Data Access and Proprietary Information..........................7
8. Indemnification..................................................9
9. Standard of Care................................................10
10. Year 2000.......................................................10
11. Confidentiality.................................................11
12. Covenants of the Fund and the Transfer Agent....................11
13. Termination of Agreement........................................12
14. Assignment and Third Party Beneficiaries........................12
15. Subcontractors..................................................13
16. Miscellaneous...................................................13
17. Additional Funds................................................14
<PAGE>
TRANSFER AGENCY AND SERVICE AGREEMENT
AGREEMENT made as of the 26th day of April, 1999, by and between GAM FUNDS,
INC., a Maryland corporation, having its principal office and place of business
at 135 East 57th Street, New York, New York 10022 (the "Fund"), and STATE STREET
BANK AND TRUST COMPANY, a Massachusetts trust company having its principal
office and place of business at 225 Franklin Street, Boston, Massachusetts 02110
(the "Transfer Agent").
WHEREAS, the Fund is authorized to issue shares in separate series, with each
such series representing interests in a separate portfolio of securities and
other assets; and
WHEREAS, the Fund intends to initially offer shares in seven (7) series, such
series shall be named in the attached Schedule A which may be amended by the
parties from time to time (each such series, together with all other series
subsequently established by the Fund and made subject to this Agreement in
accordance with SECTION 17, being herein referred to as a "Portfolio", and
collectively as the "Portfolios");
WHEREAS, the Fund on behalf of the Portfolios desires to appoint the Transfer
Agent as its transfer agent, dividend disbursing agent, custodian of certain
retirement plans and agent in connection with certain other activities, and the
Transfer Agent desires to accept such appointment;
NOW, THEREFORE, in consideration of the mutual covenants herein contained, the
parties hereto agree as follows:
l. TERMS OF APPOINTMENT AND DUTIES
1.1 TRANSFER AGENCY SERVICES. Subject to the terms and
conditions set forth in this Agreement, the Fund, on behalf
of the Portfolios, hereby employs and appoints the Transfer
Agent to act as, and the Transfer Agent agrees to act as its
transfer agent for the Fund's authorized and issued shares
of its common stock, $ .001 par value, ("Shares"), dividend
disbursing agent, custodian of certain retirement plans and
agent in connection with any accumulation, open-account or
similar plan provided to the shareholders of each of the
respective Portfolios of the Fund ("Shareholders") and set
out in the currently effective prospectus and statement of
additional information ("prospectus") of the Fund on behalf
of the applicable Portfolio, including without limitation
any periodic investment plan or periodic withdrawal program.
In accordance with procedures established from time to time
by agreement between the Fund on behalf of each of the
Portfolios, as applicable and the Transfer Agent, the
Transfer Agent agrees that it will perform the following
services:
<PAGE>
(a) Receive for acceptance, orders for the purchase of Shares, and
promptly deliver payment and appropriate documentation thereof to the
Custodian of the Fund authorized pursuant to the Articles of
Incorporation of the Fund (the "Custodian");
(b) Pursuant to purchase orders, issue the appropriate number of
Shares and hold such Shares in the appropriate Shareholder account;
(c) Receive for acceptance redemption requests and redemption
directions and deliver the appropriate documentation thereof to the
Custodian;
(d) In respect to the transactions in items (a), (b) and (c) above,
the Transfer Agent shall execute transactions directly with
broker-dealers authorized by the Fund;
(e) In the event of a late trade, with respect to as-of trades
processed by a broker/dealer, the Transfer Agent agrees to use
reasonable efforts to monitor and report any loss resulting from such
trade to the Fund.
(f) At the appropriate time as and when it receives monies paid to it
by the Custodian with respect to any redemption, pay over or cause to
be paid over in the appropriate manner such monies as instructed by the
redeeming Shareholders;
(g) Effect transfers of Shares by the registered owners thereof upon
receipt of appropriate instructions;
(h) Prepare and transmit payments for dividends and distributions
declared by the Fund on behalf of the applicable Portfolio;
(i) Issue replacement certificates for those certificates alleged to
have been lost, stolen or destroyed upon receipt by the Transfer Agent
of indemnification satisfactory to the Transfer Agent and protecting
the Transfer Agent and the Fund, and the Transfer Agent at its option,
may issue replacement certificates in place of mutilated stock
certificates upon presentation thereof and without such indemnity;
(j) Maintain records of account for and advise the Fund and its
Shareholders as to the foregoing; and
(k) Record the issuance of Shares of the Fund and maintain pursuant to
SEC Rule 17Ad-10(e) a record of the total number of Shares of the Fund
which are authorized, based upon data provided to it by the Fund, and
issued and outstanding. The Transfer Agent shall also provide the Fund
or the Fund's agent on a regular basis with the total number of Shares
which are authorized and issued and outstanding and shall have no
obligation, when recording the issuance of Shares, to monitor the
issuance of such Shares or to take cognizance of any laws relating to
the issue or sale of such Shares, which functions shall be the sole
responsibility of the Fund.
1.2 ADDITIONAL SERVICES. In addition to, and neither in lieu nor in
contravention of, the services set forth in the above paragraph, the
Transfer Agent shall perform the following services:
2
<PAGE>
(a) OTHER CUSTOMARY SERVICES. Perform the customary services of a
transfer agent, dividend disbursing agent, custodian of certain
retirement plans and, as relevant, agent in connection with
accumulation, open-account or similar plan (including without
limitation any periodic investment plan or periodic withdrawal
program), including but not limited to: maintaining all Shareholder
accounts, preparing Shareholder meeting lists, mailing Shareholder
proxies, Shareholder reports and prospectuses to current Shareholders
including, Forms W-8, W-9 and 1042 when required, withholding taxes on
U.S. resident and non-resident alien accounts, preparing and filing
U.S. Treasury Department Forms 1099 and other appropriate forms
required with respect to dividends and distributions by federal
authorities for all Shareholders, preparing and mailing confirmation
forms and statements of account to Shareholders for all purchases and
redemptions of Shares and other confirmable transactions in Shareholder
accounts, preparing and mailing activity statements for Shareholders,
and providing Shareholder account information.
(b) CONTROL BOOK (ALSO KNOWN AS "SUPER SHEET"). Maintain a daily
record and produce a daily report for the Fund of all transactions and
receipts and disbursements of money and securities and deliver a copy
of such report for the Fund for each business day to the Fund no later
than 9:00 AM Eastern Time, or such earlier time as the Fund may
reasonably require, on the next business day;
(c) "BLUE SKY" REPORTING. The Fund shall (i) identify to the Transfer
Agent in writing those transactions and assets to be treated as exempt
from blue sky reporting for each State; and (ii) verify the
establishment of transactions for each State on the system prior to
activation and thereafter monitor the daily activity for each State.
The responsibility of the Transfer Agent for the Fund's blue sky State
registration status is solely limited to the initial establishment of
transactions subject to blue sky compliance by the Fund and providing a
system which will enable the Fund to monitor the total number of Shares
sold in each State;
(d) NATIONAL SECURITIES CLEARING CORPORATION (THE "NSCC"). (i) Accept
and effectuate the registration and maintenance of accounts through
Networking and the purchase, redemption, transfer and exchange of
shares in such accounts through Fund/SERV (networking and Fund/SERV
being programs operated by the NSCC on behalf of NSCC's participants,
including the Fund), in accordance with, instructions transmitted to
and received by the Transfer Agent by transmission from NSCC on behalf
of broker-dealers and banks which have been established by, or in
accordance with the instructions of authorized persons, as hereinafter
defined on the dealer file maintained by the Transfer Agent; (ii) issue
instructions to Fund's banks for the settlement of transactions between
the Fund and NSCC (acting on behalf of its broker-dealer and bank
participants); (iii) provide account and transaction information from
the affected Fund's records on DST Systems, Inc. computer system TA2000
("TA2000 System") in accordance with NSCC's Networking and Fund/SERV
rules for those broker-dealers; and (iv) maintain Shareholder accounts
on TA2000 System through Networking.
(e) MONEY LAUNDERING. (i) comply with applicable money laundering and
currency transaction reporting laws, regulations, and government
guidance including suspicious activity reporting and record-keeping
requirements, and has adequate policies, procedures and internal
3
<PAGE>
controls to ensure compliance; (ii) Monitors transactions to identify
unacceptable forms of payment (as defined in the Fund's current
prospectus, as amended from time to time) and reportable and suspicious
transactions and reports to the appropriate authorities reportable and
suspicious transactions; and (iii) comply with applicable federal laws
and U. S. Treasury Office of Foreign Assets Control ("OFAC")
regulations, government guidance, and blocking and notification
requirements, including, but not limited to, executive orders issued by
the President of the United States (collectively referred to as "OFAC
Laws") and has adequate policies, procedures and internal controls to
ensure compliance as it pertains to embargoed and sanctioned countries
and nationals, citizens and/or residents thereof and their financial
transactions.
(f) NEW PROCEDURES. New procedures as to who shall provide certain of
these services in Section 1 may be established in writing from time to
time by agreement between the Fund and the Transfer Agent. The Transfer
Agent may at times perform only a portion of these services and the
Fund or its agent may perform these services on the Fund's behalf.
(g) ADDITIONAL TELEPHONE SUPPORT SERVICES. If the parties elect to
have the Transfer Agent provide ADDITIONAL telephone support services
under this Agreement, the parties will agree to such services, fees and
sub-contracting as stated in Schedule 1.2(f) entitled "Telephone
Support Services" attached hereto.
2. THIRD PARTY ADMINISTRATORS FOR DEFINED CONTRIBUTION PLANS
2.1 The Fund may decide to make available to certain of its customers, a
qualified plan program (the "Program") pursuant to which the customers
("Employers") may adopt certain plans of deferred compensation ("Plan
or Plans") for the benefit of the individual Plan participant (the
"Plan Participant"), such Plan(s) being qualified under Section 401(a)
of the Internal Revenue Code of 1986, as amended ("Code") and
administered by third party administrators which may be plan
administrators as defined in the Employee Retirement Income Security
Act of 1974, as amended)(the "TPA(s)").
2.2 In accordance with the procedures established in the initial Schedule
2.1 entitled "Third Party Administrator Procedures", as may be amended
by the Transfer Agent and the Fund from time to time ("Schedule 2.1"),
the Transfer Agent shall:
(a) Treat Shareholder accounts established by the Plans in the name of
the Trustees, Plans or TPAs as the case may be as omnibus accounts;
(b) Maintain omnibus accounts on its records in the name of the TPA or
its designee as the Trustee for the benefit of the Plan; and
(c) Perform all services under SECTION 1 as transfer agent of the
Funds and not as a record-keeper for the Plans.
2.3 Transactions identified under SECTION 2 of this Agreement shall be
deemed exception services ("Exception Services") when such
transactions:
4
<PAGE>
(a) Require the Transfer Agent to use methods and procedures other
than those usually employed by the Transfer Agent to perform services
under SECTION 1 of this Agreement;
(b) Involve the provision of information to the Transfer Agent after
the commencement of the nightly processing cycle of the TA2000 System;
or
(c) Require more manual intervention by the Transfer Agent, either in
the entry of data or in the modification or amendment of reports
generated by the TA2000 System than is usually required by
non-retirement plan and pre-nightly transactions.
3. FEES AND EXPENSES
3.1 FEE SCHEDULE. For the performance by the Transfer Agent pursuant to
this Agreement, the Fund agrees to pay the Transfer Agent an annual
maintenance fee for each Shareholder account as set forth in the
attached fee schedule ("Schedule 3.1"). Such fees and out-of-pocket
expenses and advances identified under SECTION 3.2 below may be changed
from time to time subject to mutual written agreement between the Fund
and the Transfer Agent.
3.2 OUT-OF-POCKET EXPENSES. In addition to the fee paid under SECTION 3.1
above, the Fund agrees to reimburse the Transfer Agent for
out-of-pocket expenses, including but not limited to confirmation
production, postage, forms, telephone, microfilm, microfiche, mailing
and tabulating proxies, records storage, or advances incurred by the
Transfer Agent for the items set out in Schedule 3.1 attached hereto.
In addition, any other expenses incurred by the Transfer Agent at the
request in writing or with the consent of the Fund, will be reimbursed
by the Fund.
3.3 POSTAGE. Postage for mailing of dividends, proxies, Fund reports and
other mailings to all shareholder accounts shall be advanced to the
Transfer Agent by the Fund at least seven (7) days prior to the mailing
date of such materials.
3.4 INVOICES. The Fund agrees to pay all fees and reimbursable expenses
within thirty (30) days following the receipt of the respective billing
notice, except for any fees or expenses which are subject to good faith
dispute. In the event of such a dispute, the Fund may only withhold
that portion of the fee or expense subject to the good faith dispute.
The Fund shall use reasonable efforts to notify the Transfer Agent in
writing within twenty-one (21) calendar days following the receipt of
each billing notice if the Fund is disputing any amounts in good faith.
4. REPRESENTATIONS AND WARRANTIES OF THE TRANSFER AGENT
The Transfer Agent represents and warrants to the Fund that:
4.1 It is a trust company duly organized and existing and in good standing
under the laws of The Commonwealth of Massachusetts.
4.2 It is duly qualified to carry on its business in The Commonwealth of
Massachusetts.
5
<PAGE>
4.3 It is empowered under applicable laws and by its Charter and By-Laws to
enter into and perform this Agreement.
4.4 All requisite corporate proceedings have been taken to authorize it to
enter into and perform this Agreement.
4.5 It has and will continue to have access to the necessary facilities,
equipment and personnel to perform its duties and obligations under
this Agreement.
5. REPRESENTATIONS AND WARRANTIES OF THE FUND
The Fund represents and warrants to the Transfer Agent that:
5.1 It is a corporation duly organized and existing and in good standing
under the laws of the State of Maryland.
5.2 It is empowered under applicable laws and by its Articles of
Incorporation and By-Laws to enter into and perform this Agreement.
5.3 All corporate proceedings required by said Articles of Incorporation
and By-Laws have been taken to authorize it to enter into and perform
this Agreement.
5.4 It is an open-end and diversified management investment company
registered under the Investment Company Act of 1940, as amended.
5.5 A registration statement under the Securities Act of 1933, as amended
is currently effective and will remain effective, and appropriate state
securities law filings have been made and will continue to be made,
with respect to all Shares of the Fund being offered for sale.
6. WIRE TRANSFER OPERATING GUIDELINES/ARTICLES 4A OF THE UNIFORM
COMMERCIAL CODE
6.1 The Transfer Agent is authorized to promptly debit the appropriate Fund
account(s) upon the receipt of a payment order in compliance with the
selected security procedure (the "Security Procedure") chosen for funds
transfer and in the amount of money that the Transfer Agent has been
instructed to transfer. The Transfer Agent shall execute payment orders
in compliance with the Security Procedure and with the Fund
instructions on the execution date provided that such payment order is
received by the customary deadline for processing such a request,
unless the payment order specifies a later time. All payment orders and
communications received after this the customary deadline will be
deemed to have been received the next business day.
6.2 The Fund acknowledges that the Security Procedure it has designated on
the Fund Selection Form was selected by the Fund from security
procedures offered by the Transfer Agent. The Fund shall restrict
access to confidential information relating to the Security Procedure
to authorized persons as communicated to the Transfer Agent in writing.
The Fund must notify the Transfer Agent immediately if it has reason to
believe unauthorized persons may have obtained access to such
6
<PAGE>
information or of any change in the Fund's authorized personnel. The
Transfer Agent shall verify the authenticity of all Fund instructions
according to the Security Procedure.
6.3 The Transfer Agent shall process all payment orders on the basis of the
account number contained in the payment order. In the event of a
discrepancy between any name indicated on the payment order and the
account number, the account number shall take precedence and govern.
6.4 The Transfer Agent reserves the right to decline to process or delay
the processing of a payment order which (a) is in excess of the
collected balance in the account to be charged at the time of the
Transfer Agent's receipt of such payment order; (b) if initiating such
payment order would cause the Transfer Agent, in the Transfer Agent's
sole judgement, to exceed any volume, aggregate dollar, network, time,
credit or similar limits which are applicable to the Transfer Agent; or
(c) if the Transfer Agent, in good faith, is unable to satisfy itself
that the transaction has been properly authorized.
6.5 The Transfer Agent shall use reasonable care to act on all authorized
requests to cancel or amend payment orders received in compliance with
the Security Procedure provided that such requests are received in a
timely manner affording the Transfer Agent reasonable opportunity to
act. However, the Transfer Agent assumes no liability in the absence of
negligence or willful misconduct if the request for amendment or
cancellation cannot be satisfied.
6.6 The Transfer Agent shall assume no responsibility for failure to detect
any erroneous payment order provided that the Transfer Agent complies
with the payment order instructions as received and the Transfer Agent
complies with the Security Procedure. The Security Procedure is
established for the purpose of authenticating payment orders only and
not for the detection of errors in payment orders.
6.7 The Transfer Agent shall assume no responsibility for lost interest
with respect to the refundable amount of any unauthorized payment
order, unless the Transfer Agent is notified of the unauthorized
payment order within thirty (30) days of notification by the Transfer
Agent of the acceptance of such payment order. In no event (including
failure to execute a payment order) shall the Transfer Agent be liable
for special, indirect or consequential damages, even if advised of the
possibility of such damages.
6.8 When the Fund initiates or receives Automated Clearing House credit and
debit entries pursuant to these guidelines and the rules of the
National Automated Clearing House Association and the New England
Clearing House Association, the Transfer Agent will act as an
Originating Depository Financial Institution and/or receiving
depository Financial Institution, as the case may be, with respect to
such entries. Credits given by the Transfer Agent with respect to an
ACH credit entry are provisional until the Transfer Agent receives
final settlement for such entry from the Federal Reserve Bank. If the
Transfer Agent does not receive such final settlement, the Fund agrees
that the Transfer Agent shall receive a refund of the amount credited
to the Fund in connection with such entry, and the party making payment
to the Fund via such entry shall not be deemed to have paid the amount
of the entry.
7
<PAGE>
6.9 Confirmation of Transfer Agent's execution of payment orders shall be
provided within twenty four (24) hours notice of which may be delivered
through the Transfer Agent's proprietary information systems, or by
facsimile or call-back. Fund must report any objections to the
execution of an order within thirty (30) days of receiving
confirmation.
7. DATA ACCESS AND PROPRIETARY INFORMATION
7.1 The Fund acknowledges that the databases, computer programs, screen
formats, report formats, interactive design techniques, and
documentation manuals furnished to the Fund by the Transfer Agent as
part of the Fund's ability to access certain Fund-related data
("Customer Data") maintained by the Transfer Agent on data bases under
the control and ownership of the Transfer Agent or other third party
("Data Access Services") constitute copyrighted, trade secret, or other
proprietary information (collectively, "Proprietary Information") of
substantial value to the Transfer Agent or other third party. In no
event shall Proprietary Information be deemed Customer Data. The Fund
agrees to treat all Proprietary Information as proprietary to the
Transfer Agent and further agrees that it shall not divulge any
Proprietary Information to any person or organization except as may be
provided hereunder. Without limiting the foregoing, the Fund agrees for
itself and its employees and agents to:
(a) Use such programs and databases (i) solely on the Fund's
computers, or (ii) solely from equipment at the location agreed to
between the Fund and the Transfer Agent and (iii) solely in accordance
with the Transfer Agent's applicable user documentation;
(b) Refrain from copying or duplicating in any way (other than in the
normal course or performing processing on the Fund's computer(s)), the
Proprietary Information;
(c) Refrain from obtaining unauthorized access to any portion of the
Proprietary Information, and if such access is inadvertently obtained,
to inform in a timely manner of such fact and dispose of such
information in accordance with the Transfer Agent's instructions;
(d) Refrain from causing or allowing information transmitted from the
Transfer Agent's computer to the Fund's terminal to be retransmitted to
any other computer terminal or other device except as expressly
permitted by the Transfer Agent (such permission not to be unreasonably
withheld);
(e) Allow the Fund to have access only to those authorized
transactions as agreed to between the Fund and the Transfer Agent; and
(f) Honor all reasonable written requests made by the Transfer Agent
to protect at the Transfer Agent's expense the rights of the Transfer
Agent in Proprietary Information at common law, under federal copyright
law and under other federal or state law.
8
<PAGE>
7.2 Proprietary Information shall not include all or any portion of any of
the foregoing items that: (i) are or become publicly available without
breach of this Agreement; (ii) are released for general disclosure by a
written release by the Transfer Agent; or (iii) are already in the
possession of the receiving party at the time or receipt without
obligation of confidentiality or breach of this Agreement.
7.3 The Fund acknowledges that its obligation to protect the Transfer
Agent's Proprietary Information is essential to the business interest
of the Transfer Agent and that the disclosure of such Proprietary
Information in breach of this Agreement would cause the Transfer Agent
immediate, substantial and irreparable harm, the value of which would
be extremely difficult to determine. Accordingly, the parties agree
that, in addition to any other remedies that may be available in law,
equity, or otherwise for the disclosure or use of the Proprietary
Information in breach of this Agreement, the Transfer Agent shall be
entitled to seek and obtain a temporary restraining order, injunctive
relief, or other equitable relief against the continuance of such
breach without prejudice to any remedies available to the Fund.
7.4 If the Fund notifies the Transfer Agent that any of the Data Access
Services do not operate in material compliance with the most recently
issued user documentation for such services, the Transfer Agent shall
endeavor in a timely manner to correct such failure. Organizations from
which the Transfer Agent may obtain certain data included in the Data
Access Services are solely responsible for the contents of such data
and the Fund agrees to make no claim against the Transfer Agent arising
out of the contents of such third-party data, including, but not
limited to, the accuracy thereof. DATA ACCESS SERVICES AND ALL COMPUTER
PROGRAMS AND SOFTWARE SPECIFICATIONS USED IN CONNECTION THEREWITH ARE
PROVIDED ON AN AS IS, AS AVAILABLE BASIS. THE TRANSFER AGENT EXPRESSLY
DISCLAIMS ALL WARRANTIES EXCEPT THOSE EXPRESSLY STATED HEREIN
INCLUDING, BUT NOT LIMITED TO, THE IMPLIED WARRANTIES OF
MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.
7.5 If the transactions available to the Fund include the ability to
originate electronic instructions to the Transfer Agent in order to:
(i) effect the transfer or movement of cash or Shares; or (ii) transmit
Shareholder information or other information, then in such event the
Transfer Agent shall be entitled to rely on the validity and
authenticity of such instruction without undertaking any further
inquiry as long as such instruction is undertaken in conformity with
security procedures established by the Transfer Agent from time to
time.
7.6 Each party shall take reasonable efforts to advise its employees of
their obligations pursuant to this SECTION 7. The obligations of this
Section shall survive any earlier termination of this Agreement.
8. INDEMNIFICATION
8.1 The Transfer Agent shall not be responsible for, and the Fund shall
indemnify and hold the Transfer Agent harmless from and against, any
and all losses, damages, costs, charges, counsel fees, payments,
expenses and liability arising out of or attributable to:
9
<PAGE>
(a) All actions of the Transfer Agent or its agents or subcontractors
required to be taken pursuant to this Agreement, provided that such
actions are taken in good faith and without negligence or willful
misconduct;
(b) The Fund's lack of good faith, negligence or willful misconduct;
(c) The reasonable reliance upon, and any subsequent use of or action
taken or omitted, by the Transfer Agent, or its agents or
subcontractors on: (i) any information, records, documents, data, stock
certificates or services, which are received by the Transfer Agent or
its agents or subcontractors by machine readable input, facsimile, CRT
data entry, electronic instructions or other similar means authorized
by the Fund, and which have been prepared, maintained or performed by
the Fund or any other person or firm on behalf of the Fund including
but not limited to any previous transfer agent or registrar; (ii) any
instructions or requests of the Fund or any of its officers; (iii) any
instructions or opinions of legal counsel with respect to any matter
arising in connection with the services to be performed by the Transfer
Agent under this Agreement which are provided to the Transfer Agent
after consultation with such legal counsel; or (iv) any paper or
document, reasonably believed to be genuine, authentic, or signed by
the proper person or persons;
(d) The offer or sale of Shares in violation of federal or state
securities laws or regulations requiring that such Shares be registered
or in violation of any stop order or other determination or ruling by
any federal or any state agency with respect to the offer or sale of
such Shares;
(e) The negotiation and processing of any checks including without
limitation for deposit into the Fund's demand deposit account
maintained by the Transfer Agent; or
(f) Upon the Fund's request entering into any agreements required by
the National Securities Clearing Corporation (the "NSCC") for the
transmission of Fund or Shareholder data through the NSCC clearing
systems.
8.2 In order that the indemnification provisions contained in this SECTION
8 shall apply, upon the assertion of a claim for which the Fund may be
required to indemnify the Transfer Agent, the Transfer Agent shall
promptly notify the Fund of such assertion, and shall keep the Fund
advised with respect to all developments concerning such claim. The
Fund shall have the option to participate with the Transfer Agent in
the defense of such claim or to defend against said claim in its own
name or in the name of the Transfer Agent. The Transfer Agent shall in
no case confess any claim or make any compromise in any case in which
the Fund may be required to indemnify the Transfer Agent except with
the Fund's prior written consent.
9. STANDARD OF CARE
9.1 The Transfer Agent shall at all times act in good faith and agrees to
use its best efforts within reasonable limits to insure the accuracy of
all services performed under this Agreement, but assumes no
10
<PAGE>
responsibility and shall not be liable for loss or damage due to errors
unless said errors are caused by its negligence, bad faith, or willful
misconduct or that of its employees, except as provided in SECTION 9.2
below.
9.2 In the case of Exception Services as defined in SECTION 2.3 herein, the
Transfer Agent shall be held to a standard of gross negligence.
Isolated encoding and payment processing errors shall not be deemed
negligence ipso facto without a showing of negligence in controls
procedures and operations..
10. YEAR 2000
The Transfer Agent has taken and will take reasonable steps to ensure
that its products (and those of its third-party suppliers) reflect the
available technology to offer products that are Year 2000 ready,
including, but not limited to, century recognition of dates,
calculations that correctly compute same century and multi century
formulas and date values, and interface values that reflect the date
issues arising between now and the next one-hundred years, and if any
changes are required, the Transfer Agent will make the changes to its
products at a price to be agreed upon by the parties and in a
commercially reasonable time frame and will require third-party
suppliers to do likewise. Transfer Agent agrees to use reasonable care
to provide services to the Fund even in light of its Year 2000 failure
11. CONFIDENTIALITY
11.1 The Transfer Agent and the Fund agree that they will not, at any time
during the term of this Agreement or after its termination, reveal,
divulge, or make known to any person, firm, corporation or other
business organization, any customers' lists, trade secrets, cost
figures and projections, profit figures and projections, or any other
secret or confidential information whatsoever, whether of the Transfer
Agent or of the Fund, used or gained by the Transfer Agent or the Fund
during performance under this Agreement. The Fund and the Transfer
Agent further covenant and agree to retain all such knowledge and
information acquired during and after the term of this Agreement
respecting such lists, trade secrets, or any secret or confidential
information whatsoever in trust for the sole benefit of the Transfer
Agent or the Fund and their successors and assigns. In the event of
breach of the foregoing by either party, the remedies provided by
SECTION 7.3 shall be available to the party whose confidential
information is disclosed. The above prohibition of disclosure shall not
apply to the extent that the Transfer Agent must disclose such data to
its sub-contractor or Fund agent for purposes of providing services
under this Agreement.
11.2 In the event that any requests or demands are made for the inspection
of the Shareholder records of the Fund, other than request for records
of Shareholders pursuant to standard subpoenas from state or federal
government authorities (i.e., divorce and criminal actions), the
Transfer Agent will endeavor to notify the Fund and to secure
instructions from an authorized officer of the Fund as to such
inspection. The Transfer Agent expressly reserves the right, however,
to exhibit the Shareholder records to any person whenever it is advised
by counsel that it may be held liable for the failure to exhibit the
Shareholder records to such person or if required by law or court
order.
11
<PAGE>
12. COVENANTS OF THE FUND AND THE TRANSFER AGENT
12.1 The Fund shall promptly furnish to the Transfer Agent the following:
(a) A certified copy of the resolution of the Board of Directors of
the Fund authorizing the appointment of the Transfer Agent and the
execution and delivery of this Agreement; and
(b) A copy of the Articles of Incorporation and By-Laws of the Fund
and all amendments thereto.
12.2 The Transfer Agent hereby agrees to establish and maintain facilities
and procedures reasonably acceptable to the Fund for safekeeping of
stock certificates, check forms and facsimile signature imprinting
devices, if any; and for the preparation or use, and for keeping
account of, such certificates, forms and devices.
12.3 The Transfer Agent shall keep records relating to the services to be
performed hereunder, in the form and manner as it may deem advisable.
To the extent required by Section 31 of the Investment Company Act of
1940, as amended, and the Rules thereunder, the Transfer Agent agrees
that all such records prepared or maintained by the Transfer Agent
relating to the services to be performed by the Transfer Agent
hereunder are the property of the Fund and will be preserved,
maintained and made available in accordance with such Section and
Rules, and will be surrendered promptly to the Fund on and in
accordance with its request.
12.4 Transfer Agent shall permit the Fund and its agents reasonable access
to its personnel and records in order to facilitate the monitoring of
the quality of the services.
12.5 Transfer Agent shall comply with all applicable federal and state
securities, insurance and tax laws applicable to the activities of the
Transfer Agent contemplated by this Agreement.
12.6 Transfer Agent shall not without written consent of the Fund make
representations concerning the Shares of the Fund except those
contained in the then current prospectus and in current printed
literature approved by the Fund.
13. TERM AND TERMINATION OF AGREEMENT
13.1 The initial term of this Agreement (the "Initial Term") shall be two
years from the mutual execution of the contract unless terminated
pursuant to the provisions of this Section. Unless a terminating party
gives written notice to the other party one-hundred twenty (120) days
before the expiration of the Initial Term this Agreement will renew
automatically from year to year ("Renewal Term"). One-hundred twenty
(120) days before the expiration of the Initial Term or a Renewal Term
the parties to this Agreement will agree upon a Fee Schedule for the
upcoming Renewal Term.
12
<PAGE>
13.2 Should the Fund exercise its right to terminate, all out-of-pocket
reasonable expenses or costs associated with the movement of records
and material will be borne by the Fund. Additionally, the Transfer
Agent reserves the right to charge for any other reasonable expenses
associated with such termination. Payment of such expenses or costs
shall be in accordance with SECTION 3.4 of this Agreement. Excluding
termination because of the Fund's material breach of the Agreement,
should the Transfer Agent exercise its right to terminate within two
(2) years of the execution of this Agreement, it will bear said
expenses of moving of records and materials.
13.3 Upon termination of this Agreement, each party shall return to the
other party all copies of confidential or proprietary materials or
information received from such other party hereunder, other than
materials or information required to be retained by such party under
applicable laws or regulations.
14. ASSIGNMENT AND THIRD PARTY BENEFICIARIES
14.1 Except as provided in SECTION 15.1 below and the Additional Telephone
Support Services Schedule 1.2(f) attached, neither this Agreement nor
any rights or obligations hereunder may be assigned by either party
without the written consent of the other party. Any attempt to do so in
violation of this Section shall be void. Unless specifically stated to
the contrary in any written consent to an assignment, no assignment
will release or discharge the assignor from any duty or responsibility
under this Agreement.
14.2 Except as explicitly stated elsewhere in this Agreement, nothing under
this Agreement shall be construed to give any rights or benefits in
this Agreement to anyone other than the Transfer Agent and the Fund,
and the duties and responsibilities undertaken pursuant to this
Agreement shall be for the sole and exclusive benefit of the Transfer
Agent and the Fund. This Agreement shall inure to the benefit of and be
binding upon the parties and their respective permitted successors and
assigns.
14.3 This Agreement does not constitute an agreement for a partnership or
joint venture between the Transfer Agent and the Fund. Other than as
provided in SECTION 15.1 and Schedule 1.2(f), neither party shall make
any commitments with third parties that are binding on the other party
without the other party's prior written consent.
15. SUBCONTRACTORS
15.1 The Transfer Agent may, without further consent on the part of the
Fund, subcontract for the performance hereof with (i) Boston Financial
Data Services, Inc., a Massachusetts corporation ("BFDS") which is duly
registered as a transfer agent pursuant to Section 17A(c)(2) of the
Securities Exchange Act of 1934, as amended, (ii) a BFDS subsidiary
duly registered as a transfer agent or (iii) a BFDS affiliate duly
registered as a transfer agent; provided, however, that the Transfer
Agent shall be fully responsible to the Fund for the acts and omissions
of BFDS or its subsidiary or affiliate as it is for its own acts and
omissions.
13
<PAGE>
15.2 Nothing herein shall impose any duty upon the Transfer Agent in
connection with or make the Transfer Agent liable for the actions or
omissions to act of unaffiliated third parties such as by way of
example and not limitation, Airborne Services, Federal Express, United
Parcel Service, the U.S. Mails, the NSCC and telecommunication
companies, provided, if the Transfer Agent selected such company, the
Transfer Agent shall have exercised due care in selecting the same.
16. MISCELLANEOUS
16.1 AMENDMENT. This Agreement may be amended or modified by a written
agreement executed by both parties and authorized or approved by a
resolution of the Board of Directors of the Fund.
16.2 MASSACHUSETTS LAW TO APPLY. This Agreement shall be construed and the
provisions thereof interpreted under and in accordance with the laws of
The Commonwealth of Massachusetts.
16.3 FORCE MAJEURE. In the event either party is unable to perform its
obligations under the terms of this Agreement because of acts of God,
strikes, equipment or transmission failure or damage reasonably beyond
its control, or other causes reasonably beyond its control, such party
shall not be liable for damages to the other for any damages resulting
from such failure to perform or otherwise from such causes.
16.4. CONSEQUENTIAL DAMAGES. Neither party to this Agreement shall be liable
to the other party for consequential damages under any provision of
this Agreement or for any consequential damages arising out of any act
or failure to act hereunder.
16.5 SURVIVAL. All provisions regarding indemnification, warranty,
liability, and limits thereon, and confidentiality and/or protections
of proprietary rights and trade secrets shall survive the termination
of this Agreement.
16.6 SEVERABILITY. If any provision or provisions of this Agreement shall be
held invalid, unlawful, or unenforceable, the validity, legality, and
enforceability of the remaining provisions shall not in any way be
affected or impaired.
16.7 PRIORITIES CLAUSE. In the event of any conflict, discrepancy or
ambiguity between the terms and conditions contained in this Agreement
and any Schedules or attachments hereto, the terms and conditions
contained in this Agreement shall take precedence.
16.8 WAIVER. No waiver by either party or any breach or default of any of
the covenants or conditions herein contained and performed by the other
party shall be construed as a waiver of any succeeding breach of the
same or of any other covenant or condition.
16.9 MERGER OF AGREEMENT. This Agreement constitutes the entire agreement
between the parties hereto and supersedes any prior agreement with
respect to the subject matter hereof whether oral or written.
14
<PAGE>
16.10 COUNTERPARTS. This Agreement may be executed by the parties hereto on
any number of counterparts, and all of said counterparts taken together
shall be deemed to constitute one and the same instrument.
16.11 REPRODUCTION OF DOCUMENTS. This Agreement and all schedules, exhibits,
attachments and amendments hereto may be reproduced by any
photographic, photostatic, microfilm, micro-card, miniature
photographic or other similar process. The parties hereto each agree
that any such reproduction shall be admissible in evidence as the
original itself in any judicial or administrative proceeding, whether
or not the original is in existence and whether or not such
reproduction was made by a party in the regular course of business, and
that any enlargement, facsimile or further reproduction shall likewise
be admissible in evidence.
16.12 NOTICES. All notices and other communications as required or permitted
hereunder shall be in writing and sent by first class mail, postage
prepaid, addressed as follows or to such other address or addresses of
which the respective party shall have notified the other.
(a) If to State Street Bank and Trust Company, to:
State Street Bank and Trust Company
c/o Boston Financial Data Services, Inc.
Two Heritage Drive
Quincy, Massachusetts 02171
Attention: Legal Department
Facsimile: (617) 774-2287
(b) If to the Fund, to:
GAM Funds, Inc.
135 East 57th Street
New York, New York 10022
Attention: Joseph J. Allessie, General Counsel
17. ADDITIONAL FUNDS
In the event that the Fund establishes one or more series of Shares in
addition to the attached Schedule A with respect to which it desires to
have the Transfer Agent render services as transfer agent under the
terms hereof, it shall so notify the Transfer Agent in writing, and if
the Transfer Agent agrees in writing to provide such services, such
series of Shares shall become a Portfolio hereunder.
15
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
in their names and on their behalf by and through their duly authorized
officers, as of the day and year first above written.
GAM FUNDS, INC.
BY: /s/ Kevin J. Blanchfield
------------------------------
Kevin J. Blanchfield
ATTEST:
- -------------------------
STATE STREET BANK AND TRUST COMPANY
BY: /s/ Ronald E. Logue
------------------------------
Ronald E. Logue
Executive Vice President
ATTEST:
- -------------------------
16
<PAGE>
SCHEDULE A
GAM Global Fund
GAM International Fund
GAM Pacific Basin Fund
GAM Japan Capital Fund
GAM Europe Fund
GAM North American Fund
GAMerica Capital Fund
GAM FUNDS, INC. STATE STREET BANK AND TRUST COMPANY
BY: /s/ Kevin J. Blanchfield BY: /s/ Ronald E. Logue
---------------------------------- -------------------------------
Kevin J. Blanchfield Ronald E. Logue
17
<PAGE>
SCHEDULE 1.2(f)
ADDITIONAL TELEPHONE SUPPORT FEES AND SERVICES
Dated: ___________
I. SERVICES
1. Transfer Agent and Telephone Support Functions
a. Answer telephone inquiries from [XXX 8 a.m. to 8 p.m. Boston time
Monday through Friday EXCEPT CHRISTMAS DAY XXX][XXX OTHER HOLIDAY
COVERAGE AVAILABLE? XXX] from [XXX existing customers and prospective
customers XXX] of the Fund [XXX for sales literature XXX] in accordance
with the telephone script provided by the Fund.
b. Answer questions pertaining thereto the extent that such questions are
answerable based upon the information supplied to the Transfer Agent by
the Fund.
c. [XXX As the Fund and the Transfer Agent may agree in writing, the
Transfer Agent will receive calls and take written transaction requests
from shareholders of the Fund. Transfer Agent transactions include:
[XXX telephone redemptions, account maintenance, exchanges, transfers,
confirmed purchases, account balances and general inquiries XXX]. Some
transactions may result in research which will be done by the Fund.
Other calls may be referred directly to the Fund. Fax any referrals to
[XXX name of company XXX] on the same day the telephone call is
received.XXX];
2. Incorporate new information into the above referenced script upon
written instructions from the Fund;
3. Maintain prospect detail information for six (6) months thereafter,
provide such information to the Fund in the form that the Fund may
reasonably request;
4. Send all literature orders for information from BFDS/DST [XXX [how?]
[to whom?] XXX] a minimum of [XXX one XXX] transmission per day;
5. Provide the Fund with a [XXX daily/weekly/monthly XXX] telephone report
detailing the calls received during the [XXX day/week/month XXX];
6. [XXX Provide the Fund with monthly conversion reports as selected by
the Fund from DST's standard report package. XXX]
7. TARGET SERVICE LEVELS: Average speed of answer is fifteen (15) seconds,
abandon rate of no more than 2%, and an overall service level of 85%.
The averages will be calculated on a weekly basis.
<PAGE>
II. SUBCONTRACTORS
1. The Transfer Agent may, without further consent on the part of the
Fund, subcontract ministerial telephone support services for the
performance hereof.
III. FEES
GAM FUNDS, INC. STATE STREET BANK AND TRUST COMPANY
BY: /s/ Kevin J. Blanchfield BY: /s/ Ronald E. Logue
---------------------------------- -------------------------------
Kevin J. Blanchfield Ronald E. Logue
<PAGE>
SCHEDULE 2.1
THIRD PARTY ADMINISTRATOR(S) PROCEDURES
Dated: April 26, 1999
1. On each Business Day, the TPA(s) shall receive, on behalf of and as
agent of the Fund(s), Instructions (as hereinafter defined) from the
Plan. Instructions shall mean as to each Fund (i) orders by the Plan
for the purchases of Shares, and (ii) requests by the Plan for the
redemption of Shares; in each case based on the Plan's receipt of
purchase orders and redemption requests by Participants in proper form
by the time required by the term of the Plan, but not later than the
time of day at which the net asset value of a Fund is calculated, as
described from time to time in that Fund's prospectus. Each Business
Day on which the TPA receives Instructions shall be a "Trade Date".
2. The TPA(s) shall communicate the TPA(s)'s acceptance of such
Instructions, to the applicable Plan.
3. On the next succeeding Business Day following the Trade Date on which
it accepted Instructions for the purchase and redemption of Shares,
(TD+1), the TPA(s) shall notify the Transfer Agent of the net amount of
such purchases or redemptions, as the case may be, for each of the
Plans. In the case of net purchases by any Plan, the TPA(s) shall
instruct the Trustees of such Plan to transmit the aggregate purchase
price for Shares by wire transfer to the Transfer Agent on (TD+1). In
the case of net redemptions by any Plan, the TPA(s) shall instruct the
Fund's custodian to transmit the aggregate redemption proceeds for
Shares by wire transfer to the Trustees of such Plan on (TD+1). The
times at which such notification and transmission shall occur on (TD+1)
shall be as mutually agreed upon by each Fund, the TPA(s), and the
Transfer Agent.
4. The TPA(s) shall maintain separate records for each Plan, which record
shall reflect Shares purchased and redeemed, including the date and
price for all transactions, and Share balances. The TPA(s) shall
maintain on behalf of each of the Plans a single master account with
the Transfer Agent and such account shall be in the name of that Plan,
the TPA(s), or the nominee of either thereof as the record owner of
Shares owned by such Plan.
5. The TPA(s) shall maintain records of all proceeds of redemptions of
Shares and all other distributions not reinvested in Shares.
6. The TPA(s) shall prepare, and transmit to each of the Plans, periodic
account statements showing the total number of Shares owned by that
Plan as of the statement closing date, purchases and redemptions of
<PAGE>
Shares by the Plan during the period covered by the statement, and the
dividends and other distributions paid to the Plan on Shares during the
statement period (whether paid in cash or reinvested in Shares).
7. The TPA(s) shall, at the request and expense of each Fund, transmit to
the Plans prospectuses, proxy materials, reports, and other information
provided by each Fund for delivery to its shareholders.
8. The TPA(s) shall, at the request of each Fund, prepare and transmit to
each Fund or any agent designated by it such periodic reports covering
Shares of each Plan as each Fund shall reasonably conclude are
necessary to enable the Fund to comply with state Blue Sky
requirements.
9. The TPA(s) shall transmit to the Plans confirmation of purchase orders
and redemption requests placed by the Plans; and
10. The TPA(s) shall, with respect to Shares, maintain account balance
information for the Plan(s) and daily and monthly purchase summaries
expressed in Shares and dollar amounts.
11. Plan sponsors may request, or the law may require, that prospectuses,
proxy materials, periodic reports and other materials relating to each
Fund be furnished to Participants in which event the Transfer Agent or
each Fund shall mail or cause to be mailed such materials to
Participants. With respect to any such mailing, the TPA(s) shall, at
the request of the Transfer Agent or each Fund, provide at the TPA(s)'s
expense complete and accurate set of mailing labels with the name and
address of each Participant having an interest through the Plans in
Shares.
GAM FUNDS, INC. STATE STREET BANK AND TRUST COMPANY
BY: /s/ Kevin J. Blanchfield BY: /s/ Ronald E. Logue
---------------------------------- -------------------------------
Kevin J. Blanchfield Ronald E. Logue
<PAGE>
SCHEDULE 3.1
GLOBAL ASSET MANAGEMENT FEES
Dated : April 26, 1999
- --------------------------------------------------------------------------------
Annual Account Service Fees
- --------------------------------------------------------------------------------
Per Account Fee $ 13.50
Closed Account Fee $ 1.80
Base Fee (per Fund/Class) $ 2,500
Complex Base Fee $ 215,000*
Each class is considered a fund and will be billed accordingly.
Fees are billable on a monthly basis at the rate of 1/12 of the annual fee. A
charge is made for an account in the month that an account opens or closes.
- --------------------------------------------------------------------------------
Activity Based Fees Year 1 Year 2+
- --------------------------------------------------------------------------------
Direct New Account Set-up $ 2.50/each $ 5.00/each
NSCC New Account Set-up $ 1.25/each $ 2.50/each
Manual Transactions $ 1.00/each $ 2.00/each
Shareholder Telephone Calls $ 1.75/each $ 3.50/each
Dealer Telephone Calls $ 2.50/each $ 5.00/each
Correspondence $ 2.50/each $ 5.00/each
- --------------------------------------------------------------------------------
Third Party Interface, (annually/per interface)
$10,000
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Other Fees, (if applicable)
- --------------------------------------------------------------------------------
Investor Processing $ 1.80/Investor
12b-1 Commissions $ 1.20/account
- --------------------------------------------------------------------------------
Ira Custodial Fees
- --------------------------------------------------------------------------------
Annual Maintenance $10.00/
(per Tax ID Number)**
- --------------------------------------------------------------------------------
Conversion Fees, (if applicable)
- --------------------------------------------------------------------------------
Per Account Fee $ 1.00
Minimum (per complex) $ 25,000
<PAGE>
- --------------------------------------------------------------------------------
Out-of-Pocket Expenses Billed as incurred
- --------------------------------------------------------------------------------
Out-of-Pocket expenses include but are not limited to: confirmation statements,
investor statements, postage, forms, banking services, audio response,
telephone, records retention, customized programming / enhancements, federal
wire, transcripts, microfilm, microfiche, and expenses incurred at the specific
direction of the fund.
The Annual Account Service fees and Activity Based fees will be subject to an
annual Cost of Living Adjustment based on regional consumer price index.
*To be allocated by number of accounts per cusip. The Complex Base Fee will grow
by $7,500 for any additional cusip over the existing 29.
**Paid by Shareholder
GAM FUNDS, INC. STATE STREET BANK AND TRUST COMPANY
BY: /s/ Kevin J. Blanchfield BY: /s/ Ronald E. Logue
---------------------------------- -------------------------------
Kevin J. Blanchfield Ronald E. Logue
EXHIBIT 23(j)
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the Post-Effective Amendment No.
33 to the Registration Statement of GAM Funds, Inc. on Form N-1A (File No.
2-92136) of our report dated February 16, 2000 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, 1999 which is incorporated by reference in the Registration Statement.
We also consent to the reference to our firm under the heading "Financial
Highlights" in the Prospectus and under the caption "Independent Accountants" in
the statement of Additional Information.
PricewaterhouseCoopers LLP
New York, New York
April 30, 2000
EXHIBITS 23(p)
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, Joseph J. Allessie, Christopher M. Wells and Margaret A.
Bancroft, 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, and 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
28th day of January 2000.
/s/ Robert J. McGuire
---------------------
Robert J. McGuire
<PAGE>
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, Joseph J. Allessie, Christopher M. Wells and Margaret A.
Bancroft, 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, and 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
28th day of January 2000.
/s/ George W. Landau
---------------------
George W. Landau
<PAGE>
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, Joseph J. Allessie, Christopher M. Wells and Margaret A.
Bancroft, 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, and 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
28th day of April 2000.
/s/ Roland S. Weiser
---------------------
Roland S. Weiser
<PAGE>
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, Joseph J. Allessie, Christopher M. Wells and Margaret A.
Bancroft, 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, and 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
28th day of January 2000.
/s/ Gilbert de Botton
---------------------
Gilbert de Botton
GLOBAL ASSET MANAGEMENT
CODE OF ETHICS PURSUANT TO RULE 17J-1 OF THE
INVESTMENT COMPANY ACT OF 1940
AND
POLICIES AND PROCEDURES TO PREVENT THE MISUSE OF
NON-PUBLIC INFORMATION PURSUANT TO SECTION 204A
OF THE INVESTMENT ADVISERS ACT OF 1940
This Code of Ethics (the "Code") shall apply to the investment operations of GAM
International Management Limited (GIML), its affiliates named in Appendix A
hereto (the "Affiliates"), and all US registered investment companies for which
it or the Affiliates act as investment adviser or underwriter (such registered
investment companies are collectively referred to herein as "Funds" or "Fund"),
as required by Rule 17j-1 of the Investment Company Act of 1940, as amended. The
Code applies to every person "associated" with GIML, the Affiliates, or any
Fund, which means every partner, officer, director and employee thereof1 (the
"GAM Group"). The Code extends to the activities of such "associated persons"
within and outside such person's duties of these entities. The Code governs
conflicts of interest in personal securities transactions that may arise when
associated persons of the GAM Group invest in securities that are held or to be
acquired by the Funds, prevents circumstances that may result in an actual or
potential conflict of interest or the appearance thereof, and prevents abuse of
an individual's position of trust and responsibility.
The Code incorporates the Policies and Procedures (the "Policy Statement")
required by Section 204A of the Investment Advisers Act of 1940, as amended,
which are reasonably designed, taking into consideration the nature of GIML's
business and the business of its affiliated US advisers, to prevent any
associated person or entity from trading in securities while in possession of
material, non-public information ("insider trading").
EVERY ASSOCIATED PERSON MUST READ, ACKNOWLEDGE RECEIPT AND UNDERSTANDING OF, AND
RETAIN THIS CODE AND POLICY STATEMENT. ANY QUESTIONS REGARDING THE CODE AND
POLICY STATEMENT SHOULD BE REFERRED TO THE US COMPLIANCE OFFICER ("COMPLIANCE").
THE CODE AND POLICY STATEMENT
I. STATEMENT OF GENERAL PRINCIPLES AND PROHIBITED CONDUCT
A. GENERAL PRINCIPLES
All associated persons have a duty at all times to place the interests of
shareholders or account holders above their own interests, and never to take
inappropriate advantage of their position. All associated persons are prohibited
from engaging in, or recommending, any securities transaction WHICH PLACES OR
APPEARS TO PLACE THEIR OWN INTERESTS ABOVE THAT OF ANY FUND, AND SHALL INSURE
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1 This term covers not only the associated person, but also his or her immediate
family (including such person's spouse, minor children, stepchildren and
relatives of such person or person's spouse who are sharing such person's
household), any other member of the associated person's immediate household, or
any trust or estate of which the person or spouse is a trustee, fiduciary or
beneficiary, or any person for whom the associated person directs or effects
transactions under a power of attorney or otherwise.
<PAGE>
THAT ALL PERSONAL SECURITIES TRANSACTIONS ARE CONDUCTED CONSISTENT WITH THIS
CODE AND POLICY STATEMENT OR ANY OTHER SEPARATE PROCEDURES IN FORCE AS TO ANY
PARTICULAR GAM ENTITY WITHIN THE GAM GROUP FOR THE PROTECTION OF THE FUNDS AND
IN SUCH A MANNER AS TO AVOID ANY ACTUAL OR POTENTIAL CONFLICT OF INTEREST, OR
ANY ABUSE OF AN ASSOCIATED PERSON'S POSITION OF TRUST AND RESPONSIBILITY.
B. PROHIBITED CONDUCT
For purposes of the following prohibitions, "investment personnel" shall mean
those associated persons who, in connection with his or her regular functions or
duties, makes, participates in, or obtains information regarding the purchase or
sale of a security by a registered investment company, or whose functions relate
to the making of any recommendations with respect to such purchases or sales.
1. PERSONAL INTEREST IN SECURITIES/ISSUERS. All associated persons are
prohibited from recommending securities transactions by any Fund without
disclosing his or her interest, if any, in such securities or the issuer
thereof, including without limitation:
a. any direct or indirect beneficial ownership of any securities of
such issuer;
b. any contemplated transaction by such person in such securities;
c. any position with such issuer or its affiliates; and
d. any present or proposed business relationship between such issuer
or its affiliates and such person or any party in which such person
has a significant interest.
2. CONFIDENTIAL INFORMATION. All associated persons are prohibited from
divulging current and anticipated portfolio transactions or strategies, programs
and studies of GIML with respect to any Fund to anyone unless it is properly
within his or her duties to do so.
3. PRIVATE PLACEMENTS/IPO'S. TRANSACTIONS INVOLVING NEW ISSUES OR PRIVATELY
OFFERED SECURITIES USUALLY INVOLVE COMPLEX ISSUES OF POTENTIAL CONFLICTS OF
INTEREST OR PERSONAL ADVANTAGE. TRANSACTIONS INVOLVING NEW US PUBLIC ISSUES ARE
ALSO SUBJECT TO VARIOUS SEC AND NASD RULES AND REGULATIONS, INCLUDING
RESTRICTIONS ON SO-CALLED "HOT ISSUES". IT IS RECOMMENDED THAT ALL SUCH
OFFERINGS BE DISCUSSED WITH COMPLIANCE SUFFICIENTLY IN ADVANCE TO ALLOW TIME FOR
FULL CONSIDERATION.
4. BLACKOUT PERIODS. Investment personnel shall refer to Section II, Item 5 of
this Policy Statement to determine any Blackout Period applicable to
transactions in securities in which his or her Fund holds a position or for
which a sale or purchase is contemplated.
5. SHORT-TERM TRADING PROFITS. Investment personnel shall refer to Section II,
Item 4 of this Policy Statement to determine any restriction on short-term
trading.
6. GIFTS. No investment personnel may accept a gift (other than one or more not
exceeding $100 in combined value or it's approximate equivalent in another
currency) from any person that does business with or on behalf of any GAM Group
entity.
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7. INSIDE INFORMATION. All associated persons are prohibited from engaging in
any securities transaction for their own benefit or the benefit of others,
including the Funds, while in possession of MATERIAL, NON-PUBLIC INFORMATION2
concerning such securities. Information in your possession that you identify as
material and non-public may not be communicated to anyone, including persons
within the GAM Group, except to Compliance. In addition, care should be taken so
that such information is secure. For example, files containing material,
non-public information should be sealed and access to computer files containing
material non-public information should be restricted.
Penalties for trading on or merely communicating material, non-public
information are severe, both for the individuals involved in such unlawful
conduct and their employers. A person can be subject to some or all of the
penalties below even if he or she does not personally benefit from the
violation. Penalties include:
* TREBLE DAMAGES - fines for the person who committed the violation
of up to three times the profit gained or loss avoided, whether or
not the person actually benefited.
* CIVIL FINES - for the employer or other controlling person to the
greater of $1 Million or three times the amount of the profit
gained or loss avoided.
* JAIL SENTENCES - Up to 10 Years.
* CIVIL INJUNCTIONS
In addition to the penalties set forth above, penalties for violations of Rule
17j-1 of the Investment Company Act of 1940, as amended, may include fines of up
to $10,000, as well as jail sentences of up to five years.
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2 Material Information means information for which there is a substantial
likelihood that a reasonable investor would consider it important in making his
or her investment decisions, or information that is reasonably certain to have
an effect on the price of a company's securities. Material information does not
have to relate to a company's business. For example, information about the
contents of a forthcoming newspaper or magazine article that is expected to
affect the price of a security should be considered material. Similarly,
information concerning significant transactions which GIML intends to execute on
behalf of Funds or managed accounts could be material information and is
prohibited from being communicated.
Information that should be considered material includes, but is not limited to,
dividend changes, earnings estimates, changes in previously released earnings
estimates, significant expansion or curtailment of operations, a significant
increase or decline in orders, significant new products or discoveries,
extraordinary borrowing, purchase or sale of substantial assets, significant
merger or acquisition proposals, major litigation, liquidity problems, and
extraordinary management developments. Information is non-public until it has
been effectively communicated to the marketplace. One must be able to point to
some fact to show that the information is generally public, such as information
appearing in the DOW JONES news service, REUTERS ECONOMIC SERVICES, THE WALL
STREET JOURNAL or other publications of general circulation or communications
generally available to the public.
3
<PAGE>
II. PROCEDURES FOR PERSONAL SECURITIES TRANSACTIONS
The following procedures have been established to aid associated persons in
avoiding conflicts of interest and insider trading, and to aid the GAM Group in
preventing, detecting and imposing sanctions against such conduct. EVERY
ASSOCIATED PERSON MUST ADHERE TO THE PROCEDURES SET FORTH IN THIS SECTION II.
Those associated persons who fail to comply with this Code and Policy Statement
or such other procedures to which they are subject with respect to the Funds,
risk serious sanctions, including dismissal, substantial personal liability and
criminal penalties. If you have any questions about these procedures you should
consult Compliance.
1. ALL ASSOCIATED PERSONS ENGAGING IN ANY PERSONAL SECURITIES TRANSACTION SHALL
REPORT SUCH TRANSACTION(S) IN WRITING TO COMPLIANCE WITHIN 24 HOURS OF EFFECTING
SUCH TRANSACTION(S).3
The report shall include the date of the transaction, the security traded,
number of shares and the principal amount of each security; the nature of the
transaction; the price at which it was effected; and the broker, dealer or bank
through which it was traded. Compliance shall institute internal procedures for
conducting periodic reviews of transactions against the Fund's trade reports to
determine that no apparent or potential conflict exists.
2. ALL PERSONS WHO HAVE REPORTED UNDER 1 ABOVE SHALL, WITHIN 10 DAYS OF SUCH
TRANSACTION, SUBMIT OR HAVE SUBMITTED TO COMPLIANCE A BANK OR BROKER'S
CONFIRMATION DETAILING THE TRANSACTION. This reporting requirement can be
satisfied by having duplicate confirmations of such securities transactions sent
to Compliance by your bank or brokerage firm(s).
3. REPORTING UNDER NO. 1 SHALL NOT BE REQUIRED FOR:
(i) purchases or sales effected in any account over which the associated person
has no direct or indirect control over the investment decision-making process
(e.g., discretionary trading accounts);
(ii) transactions which are non-volitional;
(iii) purchases which are part of a systematic investment plan or automatic
dividend reinvestment plan; provided however, that notification of participation
in or termination of such plan must be given to Compliance;
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3 The term "ENGAGING IN ANY PERSONAL SECURITIES TRANSACTION" means purchasing
or selling, directly or indirectly, any security in which the associated person
has, or by reason of such transaction would acquire, any direct or indirect
beneficial ownership.
The term "SECURITY" has the meaning set forth in Section 2(a)(36) of the
Investment Company Act of 1940, as amended, and includes shares, loan stock, or
other fixed income instruments, warrants, options, futures or any other
contracts, units in a collective investment scheme, shares in funds (offshore
and onshore) or instruments dealt in or on any securities market, except that
the term does not include securities issued or guaranteed by the United States
government or its agencies or instrumentalities, banker's acceptances, bank
certificates of deposit and time deposits, commercial paper, repurchase
agreements and shares of registered open-end investment companies.
4
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(iv) purchases effected upon the exercise of rights issued by an issuer pro rata
to all holders of a class of securities, to the extent such rights were acquired
from such issuer, and the sale of rights so acquired;
(v) any securities transaction, or series of related transactions, engaged in by
non-management directors of any GAM Group entity or by the Independent Directors
of the Fund; provided however, that (i) in the case of the Funds' Independent
Directors, a report shall be filed if the Independent Fund Director knew, or in
the ordinary course of fulfilling his or her official duties as a Director of a
Fund should have known, that during the 15-day period immediately preceding or
after the date of the transaction in a security by the Director, such security
is or was purchased or sold by a Fund or the purchase or sale was considered by
the Fund or the Adviser; and (ii) in the case of each non-management director of
GIML and the Affiliates, such persons shall report with respect to such of his
or her personal securities transactions required to be reported hereunder not
later than ten (10) days after the end of the calendar quarter in which the
transaction to which the report relates was effected.
4. ALL ASSOCIATED PERSONS ARE SUBJECT TO THE 60 DAY SHORT-TERM TRADING
RESTRICTION BELOW.
Securities purchased may not be sold at a profit until at least 60 days from the
purchase trade date, and securities sold may not be purchased at a lower price
until at least 60 days from the sale trade date. Any violation will result in
disgorgement of all profits from the transaction. (THIS RESTRICTION ON 60 DAY
SHORT-TERM TRADES MAY BE WAIVED BY THE COMPLIANCE OFFICER WITH RESPECT TO TRADES
OF 500 SHARES OR LESS OF THE COMMON STOCK OF A COMPANY WITH A MARKET
CAPITALIZATION OF AT LEAST $1 BILLION.)
5. INVESTMENT MANAGERS AND INVESTMENT RELATED STAFF: Your local Compliance
Officer will inform you if you fall into the category of Investment Manager or
Investment Related Staff. As well as observing the personal dealings rules for
all employees which are outlined above, INVESTMENT MANAGERS AND INVESTMENT
RELATED STAFF ARE REQUIRED TO PRE-NOTIFY THEIR LOCAL COMPLIANCE OFFICER OF ANY
PERSONAL DEALINGS IN SECURITIES WHICH THEY INTEND TO CARRY OUT. This requirement
for prior approval shall not apply to transactions in units or shares of GAM
Funds. To avoid any potential conflicts, all Investment Managers and Investment
Related Staff are encouraged not to invest directly into securities, but instead
to utilise GAM Funds for their personal investment activities. To this end, your
Compliance Officer must give you WRITTEN authority to undertake any transactions
BEFORE you deal.
You must not deal personally in securities within 7 working days (either in
advance or retrospectively) of carrying out any transaction in the same security
on behalf of funds or portfolios which you manage or administer.
III. REPORTING REQUIREMENTS OF MEMBERS OF GAM GROUP
Each entity that is a member of the GAM Group subject to the GAM Group's Code
and Policy Statement shall designate from its staff a Compliance Director who
shall be charged with monitoring compliance with such procedures by all persons
subject thereto. The Compliance Director shall report to the Compliance Officer
of the Funds on a quarterly basis, certifying that there have been no violations
by such GAM Group personnel of the policies, and, upon the occurrence of a
breach of the policies, the Compliance Director shall notify the Compliance
Officer for the Funds in writing within five (5) business days of discovery of
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<PAGE>
the violation, describing the nature and scope of the breach and any actual or
proposed remedial and/or punitive action taken or to be taken in respect of the
violation.
IV. UNAFFILIATED FUND ADVISERS
Where the Funds shall employ the services of advisers that are not affiliated
with the GAM Group other than in their role as adviser to a Fund, the Compliance
Officer of the Fund shall be responsible for reviewing the policies and
procedures adopted and in effect with respect to the personal securities
transactions of such advisory personnel to ensure that the interests of the Fund
and its shareholders are adequately protected. A current copy of the policies
and procedures of each such adviser shall be maintained with the books and
records of the Fund at all times. On a quarterly basis, the Compliance Officer
shall request from the appropriate employee or agent acting on behalf of the
adviser, a certification that no violations of the adviser's code have occurred
in the prior quarter, or, in the event a breach of such procedures has occurred,
a description in writing of the nature and scope of the breach and any actual or
proposed remedial and/or punitive action taken or to be taken by the adviser in
respect of the violation.
V. RECORDKEEPING
The Compliance Officer shall maintain with this Code (i) a record of any
violation of such Code and of any action taken as result of such violations for
a period of not less than five years following the end of the fiscal year in
which the violation occurs; (ii) a copy of each report made by an associated
person pursuant to this Code for a period of not less than five years from the
end of the fiscal year in which it is made; and (iii) a list of all persons who
are, or within the past five years have been, required to make reports pursuant
to the Code.
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<PAGE>
ACKNOWLEDGEMENT
I hereby acknowledge that I have read, understand and will comply with the
foregoing Code and Policy Statement.
I also understand that any violations of such Code and Policy Statement or any
policies of the GAM Group incorporated by reference herein may subject me to
dismissal from the entity with which I am employed within the GAM Group.
Date: _________________________
------------------------------------
Name (Printed)
------------------------------------
Signature
(Rev. 8/98)
7
<PAGE>
APPENDIX A
Global Asset Management (USA) Inc. (Affiliate of Fund Adviser)
GAM Investments, Inc. (Affiliate of Fund Adviser)
GAM Services, Inc. (Fund Underwriter)
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BROKERAGE ACCOUNT INFORMATION
The following is a list of all brokerage accounts in which I maintain beneficial
ownership, as defined in the GAM Group's Code of Ethics. In order to comply with
the Code, I understand that the following accounts must be approved by the
Compliance Officer:
Firm/Address/Broker Account Number
- ------------------- --------------
- -------------------------------- --------------------------
- -------------------------------- --------------------------
- -------------------------------- --------------------------
- -------------------------------- --------------------------
- -------------------------------- --------------------------
- -------------------------------- --------------------------
__________ I do not maintain any type of brokerage account, which is
prohibited under the Code of Ethics.
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Date Signature
--------------------------
Print
CODE OF ETHICS
FAYEZ SAROFIM & CO. AND AFFILIATES
REVISED AS OF JANUARY 28, 2000
<PAGE>
CODE OF ETHICS
I. INTRODUCTION
This Code of Ethics (this "Code") applies to FS & Co.(1) and each other
Group Member, and, among other things, this Code is intended to, and shall
always be construed in a manner necessary to, satisfy the requirements of (i)
Rule 17j-1 under the Investment Company Act(2) and (ii) Rule 204-2 under the
Investment Advisers Act.(3) This Code applies to every Employee(4), but an
Employee who is also an Access Person is subject to certain provisions in this
Code which may not be applicable to Employees who are not Access Persons. This
Code extends to ALL activities of an Employee, both within and without such
Employee's duties as an Employee or in connection with any Fund for which a
Group Investment Adviser acts as investment adviser or sub-investment adviser.
Among other things, this Code governs conflicts of interest in personal
securities transactions, including those that typically arise when persons
associated with a Group Member or a Fund invest in securities that are held or
are to be acquired by a Fund or a Managed Account.
Each Employee must read, acknowledge receipt and understanding of, and
retain a copy of, this Code. Any questions regarding this Code should be
referred to the Compliance Officer.
II. DEFINITIONS
ACCESS PERSON: A Director, an officer and any Employee of a Group
member (i) who, in connection with her or his regular functions or duties,
makes, participates in or obtains information (a) regarding the purchase or sale
of securities for Managed Accounts, a Fund or a Group Member or (b) the
recommendations of such purchases or sales, or (ii) whose functions relate to
the making of any recommendations with respect to such purchases or sales.
COMPLIANCE ASSISTANT OR ASSISTANTS: To the extent not otherwise
determined by the Board of Directors of FS & Co., (i) either or both of Robert
M. Hopson II and William D. Hanna and (ii) such other individuals designated as
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(1) Capitalized terms used in this Code shall have the meanings ascribed to them
in the Definitions section below to the extent their meanings are not otherwise
ascribed to them elsewhere in this Code.
(2) As amended effective as of October 29, 1999.
(3) As amended effective as of October 29, 1999.
(4) In addition to being subject to this Code, all Employees are subject to the
"Code of Business Conduct of Fayez Sarofim & Co. and Affiliates."
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such by the Board of Directors of FS & Co. A Compliance Assistant shall have the
authority to act on behalf of the Compliance Committee in connection with the
gathering of information necessary for the Compliance Committee to act in the
manner intended by this Code.
COMPLIANCE OFFICER: Mrs. Raye G. White, or her successor in the office
of Executive Vice President of FS & Co. If at the time of required action by the
Compliance officer, Mrs. White, or her successor is absent, a reference to the
Compliance Officer in this Code shall mean another member of the Compliance
Committee.
COMPLIANCE COMMITTEE: Individuals designated as such by the Board of
Directors of FS & Co., such individuals as of January 28, 2000 being Mrs. Raye
G. White, Russell Hawkins, and Charles Sheedy.
EMPLOYEE: An individual employed by a Group Member.
EXEMPT ISSUER: An issuer of securities which is not required to file
reports with the SEC.
FS & CO.: Fayez Sarofim & Co., a Texas corporation.
FUND: An "investment company" within the meaning of the Investment
Company Act.
GROUP: The chain of corporations connected through stock ownership with
Sarofim Group, with (i) Sarofim Group owning directly "control stock" in one of
the other corporations, and (ii) one or more of the other corporations owning
directly "control stock" in each of the other corporations. For purposes of this
definition , "control stock" means stock of any corporation which possesses at
least 80 percent of the total voting power and which has a value equal to at
least 80 percent of the stock of such corporation.
GROUP INVESTMENT ADVISER: A Group Member registered as an investment
adviser in accordance with the Investment Advisers Act.
GROUP MEMBER: A corporate member of the Group or any partnership of
which a Group Member is a general partner.
INSIDER TRADING: Trading in Securities while in possession of
Non-Public Material Information.
INVESTMENT COMPANY ACT: The Investment Company Act of 1940, as amended.
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INVESTMENT ADVISERS ACT: The Investment Advisers Act of 1940, as
amended.
IPO: An offering registered with the SEC, the issuer of which,
immediately before the registration was an Exempt Issuer.
LIMITED OFFERING: A private placement offering which is exempt from
registration with the SEC, as well as an offering that is not public under
federal securities laws.
LIMITED OFFERING VENTURE: The entity or other business arrangement
which makes a Limited Offering.
MANAGED ACCOUNT: An account for which a Group Investment Adviser acts
as the investment adviser.
NASD: National Association of Securities Dealers.
NON-PUBLIC MATERIAL INFORMATION: Information which is both "non-public
information" and "material information."
"Non-public information" is information which has not been
effectively communicated to the marketplace. In order for information
to be other than "non-public", one must be able to point to some fact
to establish that the information is generally public. For example,
information appearing in the DOW JONES news wire service, REUTERS
ECONOMIC SERVICES, THE WALL STREET JOURNAL or other publications of
general circulation would be considered information which has been
effectively communicated to the marketplace.
"Material information" is information for which there is a
substantial likelihood that a reasonable investor would consider it
important in making her or his investment decisions, or information
that is reasonably certain to have any effect on the price of an
issuer's Securities. Information that should be considered material
includes, but is not limited to, (i) dividend changes, (ii) earnings
estimates, (iii) changes in previously released earnings estimates,
(iv) significant expansion or curtailment of operations, (v) a
significant increase or decline in orders, (vi) significant new
products or discoveries, (vii) extraordinary borrowing, (viii) purchase
or sale of substantial assets, (ix) significant merger or acquisition
proposals or agreements, (x) major litigation, (xi) liquidity problems,
and (xii) extraordinary management developments. Material information
4
<PAGE>
does not have to relate to an issuer's business. For example,
information about the contents of a forthcoming newspaper or magazine
article that is expected to affect the price of a Security should be
considered material. Similarly, information concerning significant
transactions which a Group Investment Adviser intends to execute on
behalf of a Fund or a Managed Account could be material information and
is prohibited from being communicated.
PUBLICLY-TRADED SECURITY: A Security the issuer of which is subject to
registration with the SEC.
SAROFIM GROUP: The Sarofim Group, Inc., a Texas corporation.
SEC: United States Securities and Exchange Commission.
SECURITY: "Security" has the meaning as set forth in Section 2(a)(18)
of the Investment Company Act, the text of which is also set forth in Appendix
A, except that the term does not include (i) direct obligations of the United
States government, (ii) bankers' acceptances, bank certificates of deposits,
commercial paper and high quality short-term debt instruments, including
repurchase agreements and (iii) shares issued by open-end investment companies
registered under the Investment Company Act.
III. PROHIBITED CONDUCT
As a general matter, an Employee is prohibited from engaging in, or
recommending, any Securities transaction which places, or appears to place, her
or his own interests above that of any Fund, Managed Account, Group Member or
affiliate of a Group Member (5) or any other fraudulent, deceptive or
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(5) An example of the placing of one's own interests above that of any Fund,
Managed Account, Group Member or affiliate of a Group Member could be short term
trades in a Publicly-Traded Security prior to its acquisition for a Fund,
Managed Account, Group Member or affiliate of a Group Member based on the
knowledge that such Publicly-Traded Security is going to be acquired, or is
likely to be acquired, for a Fund, Managed Account, Group Member or affiliate of
a Group Member.
5
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manipulative acts.(6) Specifically, an Employee shall not do any of the
following in connection with the purchase or sale, directly or indirectly, by
such Employee of a Security held or to be acquired by any Fund, Managed Account,
Group member or affiliate of a Group Member:
(i) Employ any device, scheme or artifice to defraud a Fund,
Managed Account, Group Member or affiliate of a Group Member;
(i) Make any untrue statement of a material fact to a Fund,
Managed Account, Group Member or affiliate of a Group Member,
in light of the circumstances under which they are made not
misleading;
(i) Engage in any act, practice or course of business that
operates or would operate as a fraud or deceit on a Fund,
Managed Account, Group Member or affiliate of a Group Member;
or
(i) Engage in any manipulative practice with respect to a Fund,
Managed Account, Group Member or affiliate of a Group Member.
DISCLOSURE OF INTERESTS
An Employee is prohibited from recommending Securities transactions by
any Fund, Managed Account, Group Member or affiliate of a Group Member without
disclosing her or his interest or potential interest, if any, in such Securities
or the issuer of such Securities, including, without limitation:
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(6)Penalties for violations of those federal securities laws pertaining to
conflict of interest matters may include fines of up to $10,000, as well as jail
sentences of up to five years.
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(i) any direct or indirect beneficial ownership (1) of any
Securities of such issuer, or its affiliates;
(ii) any contemplated transaction by such Employee in such
Securities; and
(iii) any present or proposed business relationship between such
issuer or its affiliates and such Employee or any party in
which such Employee has a significant interest.
DISCLOSURE OF INFORMATION
An Employee is prohibited from divulging the current portfolio
positions, and current and anticipated portfolio transactions, programs and
studies of a Group Investment Adviser, any Fund, any Managed Account, any Group
Member or any affiliate of any Group Member to anyone unless such divulgence is
properly within her or his duties.
DISCLOSURES WITH RESPECT TO LIMITED OFFERINGS
Each Employee will be required from time to time to provide written
assurance to the Compliance Officer that any Limited Offering Venture in which
such Employee is an investor, directly or indirectly, does not hold any
Publicly-Traded Securities. If the Employee is unable to provide such assurance,
such Employee must notify the Compliance Officer in writing of all
Publicly-Traded Securities held and on an annual basis after such time. Such
Employee must notify the Compliance Officer of any Security held by the Limited
Offering Venture which is to become a Publicly-Traded Security prior to the time
such Security becomes a Publicly-Traded Security.
INSIDER TRADING
An Employee is prohibited from engaging in ANY Securities transaction,
for her or his own benefit, or the benefit of others, including any Fund, any
Managed Account, any Group Member or any affiliate of a Group Member while in
possession of Non-Public Material Information concerning such Securities. An
Employee is prohibited from communicating, directly or indirectly, Non-Public
Material Information concerning any Security to others unless such communication
is properly within her or his duties as an Employee.
Penalties for trading on or communicating Non-Public Material
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(1)The term "beneficial ownership" is explained in Appendix A.
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Information are severe, both for the individuals involved in such unlawful
conduct and their employers. A person can be subject to some or all of the
penalties below EVEN IF SHE OR HE DOES NOT PERSONALLY BENEFIT FROM THE
VIOLATION. Penalties include:
* CIVIL INJUNCTIONS;
* TREBLE DAMAGES;
* DISGORGEMENT OF PROFITS;
* JAIL SENTENCES of up to 10 years;
* FINES for the person who committed the violation of up to
three times the profit gained or loss avoided, whether or not
the person actually benefitted; and
* FINES for the employer or other controlling person of up to
the greater of $1,000,000 or three times the amount of the
profit gained or loss avoided.
In addition, any violation of this Code can be expected to result in
serious sanctions by the Group, including dismissal of the person involved by a
Group Member.
IV. PROCEDURES FOR CLEARANCE OF PERSONAL
SECURITIES TRANSACTIONS
The following procedures have been established to aid Employees in
avoiding conflicts of interest and Insider Trading, and to aid the Group,
especially the Group Investment Advisers, in preventing, detecting and imposing
sanctions against such conduct. Every Employee must follow these procedures or
risk serious sanctions, including dismissal, substantial personal liability and
criminal penalties. If you have any questions about these procedures you should
consult the Compliance Officer. Interpretive issues that arise under these
procedures shall be decided by, and are subject to the discretion of, the
Compliance Officer.
Every Employee is prohibited from engaging in any transaction
involving, directly or indirectly, a Publicly-Traded Security without obtaining
prior approval from the Compliance Officer.(2) All requests for prior approval
of transactions in Publicly-Traded Securities shall be submitted to the
Compliance Officer by completing a REQUEST FOR APPROVAL OF ORDERS FOR PERSONAL
ACCOUNTS WITHIN FAYEZ SAROFIM & CO., which shall be substantially the same as
that form
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(2)No one may approve her or his own transactions, but must obtain prior
approval of her or his transactions from one of the approval sources.
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attached to this Code as Appendix B, and such other documents and information as
the Compliance Officer, another member of the Compliance Committee or a
Compliance Assistant deems appropriate or necessary.
Certain transactions in Publicly-Traded Securities often involve
complex issues of potential conflicts of interest or personal advantage.
Examples of these transactions are IPO's, "hot issue" public offerings and
Limited Offerings involving direct or indirect investments in Publicly-Traded
Securities. Transactions involving IPOs are also subject to various SEC and NASD
rules and regulations, including restrictions on the purchase of so-called "hot
issues" by persons associated with a registered investment adviser. Thus, an
Employee should be aware that the following transactions in Publicly-Traded
Securities will not be approved by the Compliance Officer, without the
establishment of extraordinary circumstances justifying such approval:
(i) the purchase of Publicly-Traded Securities in any "hot issue"
public offering;
(ii) the purchase of Securities in any IPO; and
(iii) transactions in Securities during "blackout periods" under
federal securities laws.
As used in this Code, the term "engaging in any transaction involving,
directly or indirectly, a Publicly-Traded Security" means purchasing or selling,
directly or indirectly, any Publicly-Traded Security in which the Employee has,
or by reason of such transaction would acquire, any direct or indirect
beneficial ownership. Unless the Compliance Officer otherwise determines in
writing, this term applies not only to the Employee, but also to the Employee's
immediate family (including such person's spouse, minor children, stepchildren
and relatives of the Employee or the Employee's spouse who are sharing the
Employee's household), any other member of the Employee's immediate household,
or any trust or estate of which the Employee or spouse is a trustee or other
fiduciary or beneficiary or of which the Employee's minor child is a
beneficiary, or any person for whom the Employee directs or effects transactions
under a power of attorney or otherwise, PROVIDED, HOWEVER, that accounts in
which the Employee or members of the Employee's family have an economic
interest, but do not participate in investment decisions, such decisions being
made exclusively by independent parties, are not covered.
The Compliance Officer shall promptly notify the Employee whether the
request for approval of engaging in a personal Publicly-Traded Securities
transaction is approved or denied, and the Compliance Officer shall record such
9
<PAGE>
action and retain such record for such periods as are required by applicable
federal securities laws. It is expected that all orders implementing a personal
Publicly-Traded Securities transaction will be promptly entered after
notification of approval. In any event, clearance to enter an order shall be
effective for only one hour after approval is given.
The Compliance Officer ordinarily will approve a proposed purchase or
sale whenever:
(i) no Fund, Managed Account, Group Member or affiliate of a Group
Member is purchasing or selling, or considering for purchase
or sale, such Publicly-Traded Security;
(ii) the Employee represents that she or he does not possess
Non-Public Material Information concerning the Publicly-Traded
Security proposed to be purchased or sold;
(iii) the Employee represents that she or he has disclosed all
personal interests as required by this Code; and
(iv) it does not otherwise appear to the Compliance Officer based
upon the facts available at the time the prior approval
request is made, that the transaction in question (a) would
amount to Insider Trading, (b) involves a "hot issue", (c)
would involve an IPO, or (d) would result in, or give the
appearance of, a conflict of interest between the Employee and
a Fund, Managed Account, Group Member or affiliate of a Group
Member.
V. ADDITIONAL REPORTING OF PERSONAL
PUBLICLY-TRADED SECURITIES TRANSACTIONS
Each Employee must cooperate with the Compliance Assistants in the
collection, retention and maintenance of all reports required by this Code.
REPORTS BY EMPLOYEES
The following reports are required to be submitted by Employees;
provided, however, such reports are not required with respect to transactions
effected for, and Publicly-Traded Securities held in, any account over which the
Employee has no direct or indirect control.(1) From time to time, the Group may
- ----------
(1)In order for an Employee to be able to claim that she or he has no direct or
indirect control over an account, such Employee must receive the Compliance
Officer's written agreement to that effect.
10
<PAGE>
report or may be required to report to the directors of a Fund some or all of
the information provided by Employees pursuant to the requirements of this Code.
INITIAL HOLDINGS REPORT
No later than ten days after an individual becomes an Employee, such
individual must submit to the Compliance Officer an Initial Holdings Report
containing the following information:
(i) The title, number of shares and principal amount of each
Publicly-Traded Security in which such she or he had any
direct or indirect beneficial ownership when such individual
became an Employee;
(ii) the name of any broker, dealer or bank with whom or which such
Employee maintained an account in which any Publicly-Traded
Securities were held for such Employee's direct or indirect
benefit as of the date she or he became an Employee; and
(iii) the date that such Initial Holdings Report is submitted by
such Employee.
The Initial Holdings Report shall be substantially the same as that contained in
Appendix C to this Code. If, after submitting the Initial Holdings Report and
before submission of the Annual Holdings Report (see below), an Employee opens a
brokerage account, such Employee is required to send written notification of
such fact disclosing the name and address of the broker and the account number
of the account to the Compliance Officer prior to engaging in any
Publicly-Traded Securities transactions through such account.
ANNUAL HOLDINGS REPORTS
On or before January 29 of each calendar year, an Employee shall submit
to the Compliance Officer an Annual Holdings Report containing the following
information which must be current as of a date no more than 30 days before the
Annual Holdings Report is submitted:
(i) The title, number of shares and principal amount of each
Publicly-Traded Security in which such Employee had any direct
or indirect beneficial ownership;
(ii) the name of any broker, dealer or bank with whom or which such
Employee maintained an account in which any Publicly-Traded
Securities are held for the such Employee's direct or indirect
benefit; and
11
<PAGE>
(iii) the date that such Annual Holdings Report is submitted by such
Employee.
The Annual Holdings Report shall be substantially the same as that contained in
Appendix D to this Code.
Reports by Employees Who are Also Access Persons
QUARTERLY TRANSACTION REPORTS
No later than ten days after the end of a calendar quarter, an Employee
who is an Access Person must submit to the Compliance Officer a Quarterly
Transaction Report containing the following information:
(i) With respect to any Publicly-Traded Security transaction
during the quarter in which the Access Person had any direct
or indirect beneficial ownership:
(a) The date of the transaction, the title, the interest
rate and maturity date (if applicable), the number of
shares and the principal amount of each
Publicly-Traded Security involved,
(b) the nature of the transaction (I.E., purchase, sale,
or any other type of acquisition or disposition),
(c) the Publicly-Traded Security price at which the
transaction was effected,
(d) the name of the broker, dealer or bank with or
through which the transaction was effected, and
(e) the date that the report is submitted.
(ii) With respect to any account established by the Access Person
in which any Publicly-Traded Securities were held during the
quarter for the direct or indirect benefit of the Access
Person:
12
<PAGE>
(a) The name of the broker, dealer or bank with whom or
which such Access Person established the account,
(b) the date the account was established, and
(c) the date that the report is submitted by such Access
Person.
The Quarterly Transaction Report shall be substantially the same as that
contained in Appendix E to this Code.
13
<PAGE>
ACCESS PERSON QUESTIONNAIRE
Each Access Person shall complete a questionnaire substantially in the
form of Appendix F at such times as requested by the Compliance Officer.
CONFIRMATIONS AND STATEMENTS FROM ALL EMPLOYEES
All Employees engaging in any personal Publicly-Traded Securities
transactions must provide the Compliance Officer with timely duplicate
confirmations of such transactions. In this regard, all Employees shall take
such steps as required by the Compliance Officer to ensure that (i) duplicate
copies of confirmations of Publicly-Traded Securities transactions and (ii)
monthly or quarterly statements are submitted to the Compliance Officer.
The Compliance Officer shall send a letter (which shall be signed by
the Employee), in the form annexed hereto as Appendix G, to the broker-dealer or
other entity responsible for preparation of such confirmations and statements in
order to ensure receipt by the appropriate Group Member of duplicate
confirmations and monthly statements. All information relating to personal
Publicly-Traded Securities transactions received by the Compliance Officer shall
be treated as "Personal and Confidential", but will be available for inspection
by other members of the Compliance Committee, the Compliance Assistants, the
Board of Directors of a Group Member, individuals authorized by relevant laws to
so inspect, and by relevant regulatory agencies.
VI. GUIDELINES TO CONSIDER BEFORE INVESTING
Before seeking approval for engaging in any personal Publicly-Traded
Securities transaction, an Employee should at least consider the answers to the
following questions:
(i) Is the Publicly-Traded Security involved also a
Publicly-Traded Security being purchased or sold or subject to
a program for purchase or sale by a Fund or Managed Account?
(ii) Is the Publicly-Traded Security being considered for purchase
or sale by a Fund or other Managed Account? (A Publicly-Traded
Security is being considered for purchase or sale whenever a
recommendation to purchase or sell such Publicly-Traded
Security has been made to an investment officer of a Fund, or
a Principal of the Group for a Managed Account, and such
person has not affirmatively rejected such recommendation).
14
<PAGE>
With respect to Publicly-Traded Securities about which an Employee may
have Non-Public Material Information, the Employee should at least consider the
answers to the following questions before trading for herself or himself or
others, including Funds or Managed Accounts:
(i) Is the information "material information"? Is this information
that an investor would consider important in making her or his
investment decision? Is this information that would
substantially affect the market price of the securities if
generally disclosed?
(ii) Is the information "non-public"? To whom has this information
been provided? Has the information been effectively
communicated to the marketplace by being published in the DOW
JONES news wire service, REUTERS ECONOMIC SERVICES, THE WALL
STREET JOURNAL or other publications of general circulation?
If, after consideration of the items set forth above, there is any
unresolved question as to the applicability or interpretation of the foregoing
procedures or as to the propriety of trading on such information, an Employee
should contact the Compliance Officer before trading or communicating the
information to anyone.
VII. RESTRICTING ACCESS TO MATERIAL NON-PUBLIC INFORMATION
Information in an Employee's possession that the Employee or others
have identified as Non-Public Material Information may not be communicated to
anyone, including persons within the Group, except the Compliance Officer,
another member of the Compliance Committee or a Compliance Assistant. In
addition, care should be taken so that such Non-Public Material Information is
secure. For example, files containing Non-Public Material Information should be
sealed and access to computer files containing Non-Public Material Information
should be restricted.
APPENDIXES:
Appendix A - "What Constitutes A Security?" and "What Is Beneficial Ownership?"
Appendix B - Request For Approval of Orders For Personal Accounts
Appendix C - Initial Holdings Report
Appendix D - Annual Holdings Report
Appendix E - Access Person Quarterly Transaction Report
Appendix F - Access Person Questionnaire
Appendix G - Letter to Broker/Dealer
15
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 001
<NAME> GAM Global Class A
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> YEAR
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<PERIOD-START> JAN-01-1999
<PERIOD-END> DEC-31-1999
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<NAME> GAM Global Class B
<MULTIPLIER> 1
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<PAID-IN-CAPITAL-COMMON> 75,674,311
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<SHARES-COMMON-PRIOR> 544,380
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<OVERDISTRIBUTION-GAINS> (4,544,175)
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<EXPENSES-NET> 2,466,752
<NET-INVESTMENT-INCOME> (1,031,701)
<REALIZED-GAINS-CURRENT> 9,836,694
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<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
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<NUMBER-OF-SHARES-SOLD> 157,726
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<NAME> GAM Global Class C
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<S> <C>
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<TABLE> <S> <C>
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</TABLE>
<TABLE> <S> <C>
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<NUMBER> 011
<NAME> GAM International Class A
<MULTIPLIER> 1
<S> <C>
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<PERIOD-START> JAN-01-1999
<PERIOD-END> DEC-31-1999
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<INVESTMENTS-AT-VALUE> 1,517,814,462
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<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> (79,156,644)
<ACCUM-APPREC-OR-DEPREC> 365,856,033
<NET-ASSETS> 1,523,891,060
<DIVIDEND-INCOME> 41,425,865
<INTEREST-INCOME> 9,806,005
<OTHER-INCOME> 0
<EXPENSES-NET> 39,386,927
<NET-INVESTMENT-INCOME> 11,844,943
<REALIZED-GAINS-CURRENT> 17,788,379
<APPREC-INCREASE-CURRENT> (145,345,103)
<NET-CHANGE-FROM-OPS> (115,711,781)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 21,179,421
<NUMBER-OF-SHARES-REDEEMED> (70,998,170)
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> (1,464,310,179)
<ACCUMULATED-NII-PRIOR> 48,844,853
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> (114,049,288)
<GROSS-ADVISORY-FEES> 21,736,189
<INTEREST-EXPENSE> 1,454,787
<GROSS-EXPENSE> 39,386,927
<AVERAGE-NET-ASSETS> 1,899,175,948
<PER-SHARE-NAV-BEGIN> 30.06
<PER-SHARE-NII> 0.17
<PER-SHARE-GAIN-APPREC> 1.93
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 32.16
<EXPENSE-RATIO> 1.76
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 012
<NAME> GAM International Class B
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> DEC-31-1999
<INVESTMENTS-AT-COST> 1,174,999,156
<INVESTMENTS-AT-VALUE> 1,517,814,462
<RECEIVABLES> 40,570,498
<ASSETS-OTHER> 23,274,184
<OTHER-ITEMS-ASSETS> 1,808,161
<TOTAL-ASSETS> 1,583,467,305
<PAYABLE-FOR-SECURITIES> 18,611,805
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 40,964,440
<TOTAL-LIABILITIES> 59,576,245
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 1,193,606,129
<SHARES-COMMON-STOCK> 2,225,969
<SHARES-COMMON-PRIOR> 2,145,228
<ACCUMULATED-NII-CURRENT> 43,585,542
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> (79,156,644)
<ACCUM-APPREC-OR-DEPREC> 365,856,033
<NET-ASSETS> 1,523,891,060
<DIVIDEND-INCOME> 41,425,865
<INTEREST-INCOME> 9,806,005
<OTHER-INCOME> 0
<EXPENSES-NET> 39,386,927
<NET-INVESTMENT-INCOME> 11,844,943
<REALIZED-GAINS-CURRENT> 17,788,379
<APPREC-INCREASE-CURRENT> (145,345,103)
<NET-CHANGE-FROM-OPS> (115,711,781)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
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<NUMBER-OF-SHARES-SOLD> 1,085,856
<NUMBER-OF-SHARES-REDEEMED> (1,005,115)
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> (1,464,310,179)
<ACCUMULATED-NII-PRIOR> 48,844,853
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<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> (114,049,288)
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<INTEREST-EXPENSE> 1,454,787
<GROSS-EXPENSE> 39,386,927
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<PER-SHARE-NAV-BEGIN> 30.41
<PER-SHARE-NII> (0.07)
<PER-SHARE-GAIN-APPREC> 1.97
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<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 32.31
<EXPENSE-RATIO> 2.48
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 013
<NAME> GAM International Class C
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> DEC-31-1999
<INVESTMENTS-AT-COST> 1,174,999,156
<INVESTMENTS-AT-VALUE> 1,517,814,462
<RECEIVABLES> 40,570,498
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<SHARES-COMMON-STOCK> 2,464,121
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<OVERDISTRIBUTION-GAINS> (79,156,644)
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<NET-ASSETS> 1,523,891,060
<DIVIDEND-INCOME> 41,425,865
<INTEREST-INCOME> 9,806,005
<OTHER-INCOME> 0
<EXPENSES-NET> 39,386,927
<NET-INVESTMENT-INCOME> 11,844,943
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<APPREC-INCREASE-CURRENT> (145,345,103)
<NET-CHANGE-FROM-OPS> (115,711,781)
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<NUMBER-OF-SHARES-SOLD> 1,687,268
<NUMBER-OF-SHARES-REDEEMED> (1,806,221)
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> (1,464,310,179)
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<OVERDIST-NET-GAINS-PRIOR> (114,049,288)
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<INTEREST-EXPENSE> 1,454,787
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<PER-SHARE-NAV-BEGIN> 30.37
<PER-SHARE-NII> (0.05)
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</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 014
<NAME> GAM International Class D
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> DEC-31-1999
<INVESTMENTS-AT-COST> 1,174,999,156
<INVESTMENTS-AT-VALUE> 1,517,814,462
<RECEIVABLES> 40,570,498
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<OTHER-ITEMS-ASSETS> 1,808,161
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<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 1,193,606,129
<SHARES-COMMON-STOCK> 3,171,592
<SHARES-COMMON-PRIOR> 5,308,001
<ACCUMULATED-NII-CURRENT> 43,585,542
<OVERDISTRIBUTION-NII> 0
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<OVERDISTRIBUTION-GAINS> (79,156,644)
<ACCUM-APPREC-OR-DEPREC> 365,856,033
<NET-ASSETS> 1,523,891,060
<DIVIDEND-INCOME> 41,425,865
<INTEREST-INCOME> 9,806,005
<OTHER-INCOME> 0
<EXPENSES-NET> 39,386,927
<NET-INVESTMENT-INCOME> 11,844,943
<REALIZED-GAINS-CURRENT> 17,788,379
<APPREC-INCREASE-CURRENT> (145,345,103)
<NET-CHANGE-FROM-OPS> (115,711,781)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
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<NUMBER-OF-SHARES-SOLD> 526,369
<NUMBER-OF-SHARES-REDEEMED> (2,662,778)
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> (1,464,310,179)
<ACCUMULATED-NII-PRIOR> 48,844,853
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<OVERDIST-NET-GAINS-PRIOR> (114,049,288)
<GROSS-ADVISORY-FEES> 21,736,189
<INTEREST-EXPENSE> 1,454,787
<GROSS-EXPENSE> 39,386,927
<AVERAGE-NET-ASSETS> 118,304,316
<PER-SHARE-NAV-BEGIN> 29.92
<PER-SHARE-NII> 0.09
<PER-SHARE-GAIN-APPREC> 1.95
<PER-SHARE-DIVIDEND> 0
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<PER-SHARE-NAV-END> 31.96
<EXPENSE-RATIO> 1.94
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 021
<NAME> GAM Pacific Basin Class A
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> DEC-31-1999
<INVESTMENTS-AT-COST> 40,048,785
<INVESTMENTS-AT-VALUE> 52,255,243
<RECEIVABLES> 2,452,686
<ASSETS-OTHER> 13,776
<OTHER-ITEMS-ASSETS> 1,974,422
<TOTAL-ASSETS> 56,696,127
<PAYABLE-FOR-SECURITIES> 502,315
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 284,576
<TOTAL-LIABILITIES> 786,891
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 61,330,460
<SHARES-COMMON-STOCK> 3,282,495
<SHARES-COMMON-PRIOR> 2,060,852
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> (806,083)
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> (16,817,126)
<ACCUM-APPREC-OR-DEPREC> 12,201,985
<NET-ASSETS> 55,909,236
<DIVIDEND-INCOME> 463,984
<INTEREST-INCOME> 108,392
<OTHER-INCOME> 0
<EXPENSES-NET> 765,156
<NET-INVESTMENT-INCOME> (192,780)
<REALIZED-GAINS-CURRENT> 3,147,505
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<NET-CHANGE-FROM-OPS> 19,885,577
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (14,232)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> (619,527)
<NUMBER-OF-SHARES-SOLD> 2,682,903
<NUMBER-OF-SHARES-REDEEMED> (1,500,538)
<SHARES-REINVESTED> 39,278
<NET-CHANGE-IN-ASSETS> 37,451,524
<ACCUMULATED-NII-PRIOR> 0
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<OVERDISTRIB-NII-PRIOR> (1,521,567)
<OVERDIST-NET-GAINS-PRIOR> (18,334,451)
<GROSS-ADVISORY-FEES> 314,098
<INTEREST-EXPENSE> 7,408
<GROSS-EXPENSE> 765,156
<AVERAGE-NET-ASSETS> 27,437,578
<PER-SHARE-NAV-BEGIN> 8.23
<PER-SHARE-NII> (0.04)
<PER-SHARE-GAIN-APPREC> 6.19
<PER-SHARE-DIVIDEND> (0.21)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 14.17
<EXPENSE-RATIO> 2.26
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 022
<NAME> GAM Pacific Basin Class B
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> DEC-31-1999
<INVESTMENTS-AT-COST> 40,048,785
<INVESTMENTS-AT-VALUE> 52,255,243
<RECEIVABLES> 2,452,686
<ASSETS-OTHER> 13,776
<OTHER-ITEMS-ASSETS> 1,974,422
<TOTAL-ASSETS> 56,696,127
<PAYABLE-FOR-SECURITIES> 502,315
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 284,576
<TOTAL-LIABILITIES> 786,891
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 61,330,460
<SHARES-COMMON-STOCK> 414,268
<SHARES-COMMON-PRIOR> 30,477
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> (806,083)
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> (16,817,126)
<ACCUM-APPREC-OR-DEPREC> 12,201,985
<NET-ASSETS> 55,909,236
<DIVIDEND-INCOME> 463,984
<INTEREST-INCOME> 108,392
<OTHER-INCOME> 0
<EXPENSES-NET> 765,156
<NET-INVESTMENT-INCOME> (192,780)
<REALIZED-GAINS-CURRENT> 3,147,505
<APPREC-INCREASE-CURRENT> 16,930,852
<NET-CHANGE-FROM-OPS> 19,885,577
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> (56,488)
<NUMBER-OF-SHARES-SOLD> 416,934
<NUMBER-OF-SHARES-REDEEMED> (34,708)
<SHARES-REINVESTED> 1,565
<NET-CHANGE-IN-ASSETS> 37,451,524
<ACCUMULATED-NII-PRIOR> 0
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<OVERDISTRIB-NII-PRIOR> (1,521,567)
<OVERDIST-NET-GAINS-PRIOR> (18,334,451)
<GROSS-ADVISORY-FEES> 314,098
<INTEREST-EXPENSE> 7,408
<GROSS-EXPENSE> 765,156
<AVERAGE-NET-ASSETS> 2,214,957
<PER-SHARE-NAV-BEGIN> 8.96
<PER-SHARE-NII> (0.19)
<PER-SHARE-GAIN-APPREC> 6.26
<PER-SHARE-DIVIDEND> (0.14)
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<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 14.89
<EXPENSE-RATIO> 3.48
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 023
<NAME> GAM Pacific Basin Class C
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> DEC-31-1999
<INVESTMENTS-AT-COST> 40,048,785
<INVESTMENTS-AT-VALUE> 52,255,243
<RECEIVABLES> 2,452,686
<ASSETS-OTHER> 13,776
<OTHER-ITEMS-ASSETS> 1,974,422
<TOTAL-ASSETS> 56,696,127
<PAYABLE-FOR-SECURITIES> 502,315
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 284,576
<TOTAL-LIABILITIES> 786,891
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 61,330,460
<SHARES-COMMON-STOCK> 114,238
<SHARES-COMMON-PRIOR> 20,090
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> (806,083)
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> (16,817,126)
<ACCUM-APPREC-OR-DEPREC> 12,201,985
<NET-ASSETS> 55,909,236
<DIVIDEND-INCOME> 463,984
<INTEREST-INCOME> 108,392
<OTHER-INCOME> 0
<EXPENSES-NET> 765,156
<NET-INVESTMENT-INCOME> (192,780)
<REALIZED-GAINS-CURRENT> 3,147,505
<APPREC-INCREASE-CURRENT> 16,930,852
<NET-CHANGE-FROM-OPS> 19,885,577
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> (3,773)
<NUMBER-OF-SHARES-SOLD> 102,059
<NUMBER-OF-SHARES-REDEEMED> (8,134)
<SHARES-REINVESTED> 223
<NET-CHANGE-IN-ASSETS> 37,451,524
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> (1,521,567)
<OVERDIST-NET-GAINS-PRIOR> (18,334,451)
<GROSS-ADVISORY-FEES> 314,098
<INTEREST-EXPENSE> 7,408
<GROSS-EXPENSE> 765,156
<AVERAGE-NET-ASSETS> 587,937
<PER-SHARE-NAV-BEGIN> 8.12
<PER-SHARE-NII> (0.39)
<PER-SHARE-GAIN-APPREC> 5.51
<PER-SHARE-DIVIDEND> (0.03)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 13.21
<EXPENSE-RATIO> 5.57
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 024
<NAME> GAM Pacific Basin Class D
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> DEC-31-1999
<INVESTMENTS-AT-COST> 40,048,785
<INVESTMENTS-AT-VALUE> 52,255,243
<RECEIVABLES> 2,452,686
<ASSETS-OTHER> 13,776
<OTHER-ITEMS-ASSETS> 1,974,422
<TOTAL-ASSETS> 56,696,127
<PAYABLE-FOR-SECURITIES> 502,315
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 284,576
<TOTAL-LIABILITIES> 786,891
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 61,330,460
<SHARES-COMMON-STOCK> 123,779
<SHARES-COMMON-PRIOR> 129,496
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> (806,083)
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> (16,817,126)
<ACCUM-APPREC-OR-DEPREC> 12,201,985
<NET-ASSETS> 55,909,236
<DIVIDEND-INCOME> 463,984
<INTEREST-INCOME> 108,392
<OTHER-INCOME> 0
<EXPENSES-NET> 765,156
<NET-INVESTMENT-INCOME> (192,780)
<REALIZED-GAINS-CURRENT> 3,147,505
<APPREC-INCREASE-CURRENT> 16,930,852
<NET-CHANGE-FROM-OPS> 19,885,577
<EQUALIZATION> 0
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<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> (15,130)
<NUMBER-OF-SHARES-SOLD> 76,465
<NUMBER-OF-SHARES-REDEEMED> (83,134)
<SHARES-REINVESTED> 952
<NET-CHANGE-IN-ASSETS> 37,451,524
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> (1,521,567)
<OVERDIST-NET-GAINS-PRIOR> (18,334,451)
<GROSS-ADVISORY-FEES> 314,098
<INTEREST-EXPENSE> 7,408
<GROSS-EXPENSE> 765,156
<AVERAGE-NET-ASSETS> 1,257,286
<PER-SHARE-NAV-BEGIN> 8.11
<PER-SHARE-NII> (0.16)
<PER-SHARE-GAIN-APPREC> 6.13
<PER-SHARE-DIVIDEND> (0.13)
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<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 13.95
<EXPENSE-RATIO> 2.89
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 031
<NAME> GAM Japan Class A
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> DEC-31-1999
<INVESTMENTS-AT-COST> 44,936,907
<INVESTMENTS-AT-VALUE> 64,609,177
<RECEIVABLES> 1,805,947
<ASSETS-OTHER> 13,590
<OTHER-ITEMS-ASSETS> 6,403,045
<TOTAL-ASSETS> 72,831,759
<PAYABLE-FOR-SECURITIES> 500,196
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 318,993
<TOTAL-LIABILITIES> 819,189
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 56,562,348
<SHARES-COMMON-STOCK> 4,819,899
<SHARES-COMMON-PRIOR> 2,963,123
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> (1,723,177)
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> (2,531,181)
<ACCUM-APPREC-OR-DEPREC> 19,704,580
<NET-ASSETS> 72,012,570
<DIVIDEND-INCOME> 156,276
<INTEREST-INCOME> 130,604
<OTHER-INCOME> 0
<EXPENSES-NET> 919,003
<NET-INVESTMENT-INCOME> (632,123)
<REALIZED-GAINS-CURRENT> 9,163,778
<APPREC-INCREASE-CURRENT> 20,359,363
<NET-CHANGE-FROM-OPS> 28,891,018
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> (2,100,948)
<NUMBER-OF-SHARES-SOLD> 4,463,325
<NUMBER-OF-SHARES-REDEEMED> (2,728,426)
<SHARES-REINVESTED> 121,877
<NET-CHANGE-IN-ASSETS> 47,739,719
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> (564,454)
<OVERDIST-NET-GAINS-PRIOR> (10,032,285)
<GROSS-ADVISORY-FEES> 419,808
<INTEREST-EXPENSE> 2,940
<GROSS-EXPENSE> 919,003
<AVERAGE-NET-ASSETS> 39,302,626
<PER-SHARE-NAV-BEGIN> 7.65
<PER-SHARE-NII> (0.14)
<PER-SHARE-GAIN-APPREC> 6.77
<PER-SHARE-DIVIDEND> (0.43)
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<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 13.85
<EXPENSE-RATIO> 2.06
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 032
<NAME> GAM Japan Class B
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> DEC-31-1999
<INVESTMENTS-AT-COST> 44,936,907
<INVESTMENTS-AT-VALUE> 64,609,177
<RECEIVABLES> 1,805,947
<ASSETS-OTHER> 13,590
<OTHER-ITEMS-ASSETS> 6,403,045
<TOTAL-ASSETS> 72,831,759
<PAYABLE-FOR-SECURITIES> 500,196
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<OTHER-ITEMS-LIABILITIES> 318,993
<TOTAL-LIABILITIES> 819,189
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 56,562,348
<SHARES-COMMON-STOCK> 214,484
<SHARES-COMMON-PRIOR> 82,029
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> (1,723,177)
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> (2,531,181)
<ACCUM-APPREC-OR-DEPREC> 19,704,580
<NET-ASSETS> 72,012,570
<DIVIDEND-INCOME> 156,276
<INTEREST-INCOME> 130,604
<OTHER-INCOME> 0
<EXPENSES-NET> 919,003
<NET-INVESTMENT-INCOME> (632,123)
<REALIZED-GAINS-CURRENT> 9,163,778
<APPREC-INCREASE-CURRENT> 20,359,363
<NET-CHANGE-FROM-OPS> 28,891,018
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> (60,901)
<NUMBER-OF-SHARES-SOLD> 176,443
<NUMBER-OF-SHARES-REDEEMED> (48,496)
<SHARES-REINVESTED> 4,508
<NET-CHANGE-IN-ASSETS> 47,739,719
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> (564,454)
<OVERDIST-NET-GAINS-PRIOR> (10,032,285)
<GROSS-ADVISORY-FEES> 419,808
<INTEREST-EXPENSE> 2,940
<GROSS-EXPENSE> 919,003
<AVERAGE-NET-ASSETS> 1,469,472
<PER-SHARE-NAV-BEGIN> 8.11
<PER-SHARE-NII> (0.34)
<PER-SHARE-GAIN-APPREC> 6.98
<PER-SHARE-DIVIDEND> (0.30)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 14.45
<EXPENSE-RATIO> 3.80
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 033
<NAME> GAM Japan Class C
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> DEC-31-1999
<INVESTMENTS-AT-COST> 44,936,907
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<NAME> GAM Europe Class A
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<NAME> GAM Europe Class B
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<NAME> GAM Europe Class C
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<NUMBER> 051
<NAME> GAM North America Class A
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<NAME> GAM North America Class B
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<NAME> GAM North America Class C
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<NAME> GAMerica Capital Class A
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<S> <C>
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<NAME> GAMerica Capital Class B
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<S> <C>
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<NAME> GAMerica Capital Class C
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