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[LOGO]
G.T. LATIN AMERICA GROWTH FUND: ADVISOR CLASS
G.T. GLOBAL EMERGING MARKETS FUND: ADVISOR CLASS
PROSPECTUS -- MARCH 1, 1995, AS REVISED JUNE 1, 1995
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G.T. Global Emerging Markets Fund ("Emerging Markets Fund") is a mutual fund,
organized as a diversified series of G.T. Investment Funds, Inc., seeking
long-term growth of capital. The Emerging Markets Fund primarily invests in
equity securities of companies in emerging markets. G.T. Latin America Growth
Fund ("Latin America Growth Fund") is a mutual fund, organized as a
non-diversified series of G.T. Investment Funds, Inc., that seeks capital
appreciation by investing at least 65% of its total assets in securities of a
broad range of Latin American issuers, including common stock and other equity
securities, as well as debt securities.
The investment manager of Emerging Markets Fund and Latin America Growth Fund
(collectively, "Funds"), G.T. CAPITAL MANAGEMENT, INC. ("G.T. Capital"), is part
of the G.T. Group, a leading international investment advisory organization with
offices throughout the world that long has emphasized global investment. G.T.
Capital attempts to identify countries and industries where economic and
political factors, including currency movements, are likely to produce above
average growth rates, and to identify companies within such countries and
industries that are best positioned to benefit from these factors. There can be
no assurance that the Funds will achieve their investment objectives.
The Funds may invest significantly in lower quality and unrated foreign
government bonds whose credit quality is generally considered the equivalent of
U.S. corporate debt securities commonly known as "junk bonds." Investments of
this type are subject to a greater risk of loss of principal and interest.
Purchasers should carefully assess the risks associated with an investment in
either Fund.
THE FUNDS ARE INVESTMENT COMPANIES DESIGNED FOR LONG TERM INVESTORS AND NOT AS
TRADING VEHICLES. THE FUNDS DO NOT REPRESENT A COMPLETE INVESTMENT PROGRAM NOR
ARE THE FUNDS SUITABLE FOR ALL INVESTORS. AN INVESTMENT IN EITHER FUND SHOULD BE
CONSIDERED SPECULATIVE AND SUBJECT TO SPECIAL RISK FACTORS, RELATED PRIMARILY TO
THE FUNDS' INVESTMENTS IN EMERGING MARKETS AND LATIN AMERICA, RESPECTIVELY,
WHICH FACTORS SHOULD BE REVIEWED CAREFULLY BY POTENTIAL INVESTORS.
PROSPECTIVE WISCONSIN INVESTORS SHOULD NOTE THAT THE EMERGING MARKETS FUND MAY
(I) INVEST UP TO 10% OF ITS TOTAL ASSETS IN RESTRICTED SECURITIES AND (II) MAKE
SHORT SALES OF SECURITIES. THESE INVESTMENT ACTIVITIES MAY BE CONSIDERED
SPECULATIVE AND MAY INVOLVE GREATER RISK AND MAY INCREASE EMERGING MARKETS FUND
EXPENSES.
Shares offered by this Prospectus are available for purchase only by certain
investors and are offered at net asset value without the imposition of a
front-end or contingent deferred sales charge and without a Rule 12b-1 charge.
This Prospectus sets forth concisely the information an investor should know
before investing and should be read carefully and retained for future reference.
A Statement of Additional Information for each Fund dated March 1, 1995, as
revised June 1, 1995, has been filed with the Securities and Exchange Commission
and is incorporated by reference. The Statement of Additional Information, which
may be amended or supplemented from time to time, is available without charge by
writing to the Funds at 50 California Street, 27th Floor, San Francisco,
California 94111, or calling (800) 824-1580.
FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR ENDORSED OR GUARANTEED BY,
ANY BANK, NOR ARE THEY FEDERALLY INSURED BY THE FEDERAL RESERVE BOARD, THE
FEDERAL DEPOSIT INSURANCE CORPORATION, OR ANY OTHER GOVERNMENT AGENCY.
An investment in one or both of the Funds offers the following advantages:
/ / Access to Securities Markets Around the World
/ / Professional Management by a Leading Manager with Offices in the World's
Major Markets
/ / Automatic Dividend and Other Distribution Reinvestment
/ / Exchange Privileges with the Advisor Class of the Other G.T. Global Mutual
Funds
FOR FURTHER INFORMATION CALL
(800) 824-1580 OR CONTACT YOUR FINANCIAL ADVISOR.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED ON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
Prospectus Page 1
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G.T. GLOBAL EMERGING MARKETS FUND
G.T. LATIN AMERICA GROWTH FUND
TABLE OF CONTENTS
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<TABLE>
<CAPTION>
Page
---------
<S> <C>
Prospectus Summary........................................................................ 3
Financial Highlights...................................................................... 9
Investment Objectives and Policies........................................................ 11
Risk Factors.............................................................................. 19
How to Invest............................................................................. 24
How to Make Exchanges..................................................................... 25
How to Redeem Shares...................................................................... 26
Shareholder Account Manual................................................................ 28
Calculation of Net Asset Value............................................................ 29
Dividends, Other Distributions and Federal Income Taxation................................ 29
Management................................................................................ 31
Other Information......................................................................... 34
</TABLE>
Prospectus Page 2
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G.T. GLOBAL EMERGING MARKETS FUND
G.T. LATIN AMERICA GROWTH FUND
PROSPECTUS SUMMARY
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The following summary is qualified in its entirety by the more detailed
information appearing in the body of this Prospectus.
<TABLE>
<S> <C> <C>
Investment Objectives: The Emerging Markets Fund seeks long-term growth of capital
The Latin America Growth Fund seeks capital appreciation
Principal Investments: The Emerging Markets Fund normally invests at least 65% of its
total assets in equity securities of companies in emerging markets
The Latin America Growth Fund normally invests at least 65% of its
total assets in equity and debt securities issued by Latin
American companies and governments
Investment Manager: G.T. Capital, part of the G.T. Group, a leading international
investment advisory organization with over $20 billion under
management including more than $6 billion in emerging markets
Advisor Class shares are offered through this Prospectus to (a)
Advisor Class Shares: trustees or other fiduciaries purchasing shares for employee
benefit plans which are sponsored by organizations which have at
least 250 employees; (b) any account investing at least $25,000 in
one or more G.T. Global Mutual Funds if (i) a financial planner,
trust company, bank trust department or registered investment
adviser has investment discretion over such account, and (ii) the
account holder pays such person as compensation for its advice and
other services an annual fee of at least .50% on the assets in the
account; (c) any account investing at least $25,000 in one or more
G.T. Global Mutual Funds if (i) such account is established under
a "wrap fee" program, and (ii) the account holder pays the sponsor
of such program an annual fee of at least .50% on the assets in
the account; (d) accounts advised by one of the companies
comprising or affiliated with the G.T. Group; and (e) any of the
companies comprising or affiliated with the G.T. Group
Exchange Privileges: Advisor Class shares of either Fund may be exchanged for Advisor
Class shares of other G.T. Global Mutual Funds
Dividends and Other Distribu-
tions: Dividends paid annually from available net investment income and
realized net short-term capital gains; other distributions paid
annually from realized net capital gain and net gains from foreign
currency transactions, if any
Reinvestment: Distributions may be reinvested automatically in Advisor Class
shares of the distributing Fund or of other G.T. Global Mutual
Funds
Net Asset Value: Advisor Class shares of each Fund are quoted daily in the
financial section of most newspapers
</TABLE>
Prospectus Page 3
<PAGE>
G.T. GLOBAL EMERGING MARKETS FUND
G.T. LATIN AMERICA GROWTH FUND
PROSPECTUS SUMMARY
(Continued)
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THE FUNDS. The G.T. Global Emerging Markets Fund is a diversified mutual fund
and the G.T. Latin America Growth Fund is a non-diversified mutual fund, both
organized as series of G.T. Investment Funds, Inc. ("Company"), a registered
open-end investment management company. Advisor class shares of common stock of
the Funds are available through Financial Advisors that have entered into
agreements with the Funds' distributor, G.T. Global Financial Services, Inc.
("G.T. Global") and certain of its affiliates. See "How to Invest" and
"Shareholder Account Manual." Shares may be redeemed through the Funds' transfer
agent, G.T. Global Investor Services, Inc. ("Transfer Agent"). See "How to
Redeem Shares" and "Shareholder Account Manual."
INVESTMENT MANAGER AND ADMINISTRATOR. G.T. Capital is the Funds' investment
manager and administrator. G.T. Capital provides investment management or
administration services to all of the G.T. Global Mutual Funds as well as other
institutional, corporate and individual clients. G.T. Capital is part of the
G.T. Group, a leading international investment advisory organization that long
has emphasized global investing. The G.T. Group maintains fully staffed
investment offices in San Francisco, London, Tokyo, Toronto, Hong Kong,
Singapore and Sydney. As of April 1, 1995, total assets under G.T. Group
management exceeded $20 billion, of which more than $17 billion was invested in
the securities of non-U.S. issuers. Of this amount, more than $6 billion was
invested in emerging markets including the securities of Latin American issuers.
The companies comprising the G.T. Group are indirect subsidiaries of the Prince
of Liechtenstein Foundation. See "Management."
INVESTMENT OBJECTIVES, POLICIES AND RISK FACTORS.
EMERGING MARKETS FUND: The Emerging Markets Fund seeks long-term growth of
capital. It normally invests at least 65% of its total assets in equity
securities of companies in emerging markets. The Emerging Markets Fund considers
emerging markets to include all the world's countries except the United States,
Canada, Japan, Australia, New Zealand and most countries in Western Europe. See
"Investment Objectives and Policies" for a list of the emerging markets in which
the Emerging Markets Fund will consider investing for purposes of this 65%
policy. The Emerging Markets Fund may invest in the following types of equity
securities: common stocks, preferred stocks, securities convertible into such
stocks and rights and warrants to acquire such securities.
Consistent with its investment objective, the Emerging Markets Fund may invest
up to 35% of its total assets in a combination of: (i) debt securities of
government or corporate issuers in emerging markets; (ii) equity and debt
securities of issuers in developed countries, including the United States; (iii)
securities of issuers in emerging markets not specifically listed in this
Prospectus where investing may become feasible and desirable subsequent to the
date of this Prospectus; and (iv) cash and money market instruments.
The Emerging Markets Fund may invest up to 20% of its total assets in debt
securities rated below investment grade, and additionally may invest up to 15%
of its net assets in illiquid securities.
For temporary defensive purposes, the Emerging Markets Fund may hold cash (U.S.
dollars or foreign currencies) and/or invest any portion of its assets in high
quality debt securities or money market instruments of U.S. or foreign issuers.
The Emerging Markets Fund also may hold cash and invest in high quality foreign
or domestic money market instruments pending investment of proceeds from sales
of Emerging Markets Fund shares, or to meet its ordinary daily cash needs.
See "Investment Objectives and Policies" in the body of the Prospectus for a
more complete discussion of the Emerging Markets Fund's investment policies.
RISK FACTORS: EMERGING MARKETS FUND. There is no assurance that the Emerging
Markets Fund will achieve its investment objective. The Emerging Markets Fund's
net asset value will fluctuate, reflecting fluctuations in the market value of
its portfolio positions, expressed in U.S. dollars.
Investments in foreign securities involve risks relating to political and
economic developments abroad and the differences between the regulations to
which U.S. and foreign issuers are subject. Individual foreign economies may
differ favorably or unfavorably from the U.S. economy. Changes in
Prospectus Page 4
<PAGE>
G.T. GLOBAL EMERGING MARKETS FUND
G.T. LATIN AMERICA GROWTH FUND
PROSPECTUS SUMMARY
(Continued)
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foreign currency exchange rates affect the Emerging Markets Fund's net asset
value, earnings and gains and losses realized on sales of securities. Securities
of foreign companies may be less liquid and their prices more volatile than
those of securities of comparable U.S. companies. Each of these risks generally
is greater for investments in emerging markets. Because of the special risks
associated with investing in emerging markets, an investment in the Emerging
Markets Fund should be considered speculative. Certain foreign countries may
impose withholding taxes on income earned and/or gains realized by the Emerging
Markets Fund in connection with investments in such countries. See "Risk
Factors."
Investment by the Emerging Markets Fund in debt securities rated below
investment grade involves a high degree of risk. Certain of such investments may
be regarded as speculative. See "Risk Factors."
LATIN AMERICA GROWTH FUND: The Latin America Growth Fund's investment objective
is capital appreciation. The Latin America Growth Fund normally invests at least
65% of its total assets in securities of a broad range of Latin American
issuers. Under current market conditions, the Latin America Growth Fund expects
to invest primarily in equity and debt securities issued by companies and
governments in Mexico, Chile, Brazil and Argentina. However, the Latin America
Growth Fund reserves the right to be primarily invested in U.S. securities for
temporary defensive purposes or pending investment of the proceeds of new sales
of Fund shares.
Although investment opportunities in certain Latin American countries currently
may be limited, G.T. Capital believes that the potential for investment
opportunities and capital appreciation in such countries is likely to be
substantial. Though the Latin America Growth Fund may invest throughout Latin
America, the Latin America Growth Fund intends to focus its investments in
Mexico, Chile, Brazil and Argentina, which have the most developed capital
markets in Latin America. The amount invested in any one of these four countries
will vary depending on economic and other market conditions and the regulatory
environment with respect to that country. From time to time, a significant
portion of the Latin America Growth Fund's assets may be invested in any one of
them.
In selecting securities for the Latin America Growth Fund, G.T. Capital attempts
to identify those countries and industries where economic and political factors
are likely to produce above-average growth, and then selects those investments
within the countries and industries so identified that in G.T. Capital's view
are best positioned and managed to take advantage of such factors. See
"Investment Objectives and Policies" and "Risk Factors." Under normal market
conditions, the Latin America Growth Fund expects that a majority of its
investment portfolio will be comprised of equity securities. Equity securities
in which the Latin America Growth Fund may invest include common stocks,
preferred stocks and warrants to acquire such securities. Under normal
circumstances, the Latin America Growth Fund may invest up to 35% of its total
assets in a combination of equity and debt securities of U.S. issuers.
The portion of the Latin America Growth Fund's assets not invested in equity
securities may be invested in corporate and government debt securities and in
money market securities (as defined herein). The Latin America Growth Fund may
seek capital appreciation through investment in such debt securities, which
would occur through favorable changes in relative foreign exchange rates, in
relative interest rate levels, or in the creditworthiness of issuers. The
receipt of income from such debt securities is incidental to the Fund's
objective of capital appreciation.
In particular, the Latin America Growth Fund normally may invest up to 50% of
its total assets in external debt obligations issued or guaranteed by Latin
American governments or governmental entities. External debt obligations are
those in which a foreign entity or individual extends credit to a Latin American
borrower. In addition, the Latin America Growth Fund may hold and trade certain
debt securities issued by Latin American governments ("Sovereign Debt"),
including those that are or may become eligible for conversion into investments
in Latin American enterprises under debt conversion programs sponsored by
various Latin American countries, or may convert such debt into equity or other
investments under debt conversion programs. See "Investment Objectives and
Policies" and "Risk Factors."
The Fund may invest in certain money market securities (as defined herein) for
the purpose of
Prospectus Page 5
<PAGE>
G.T. GLOBAL EMERGING MARKETS FUND
G.T. LATIN AMERICA GROWTH FUND
PROSPECTUS SUMMARY
(Continued)
- --------------------------------------------------------------------------------
generating income to defray Latin America Growth Fund expenses, for temporary
defensive purposes and pending investment in accordance with the Latin America
Growth Fund's investment objective and policies.
RISK FACTORS: LATIN AMERICA GROWTH FUND. There is no assurance that the Latin
America Growth Fund will achieve its investment objective. The Latin America
Growth Fund's net asset value will fluctuate, reflecting fluctuations in the
market value of its portfolio positions and in the rate of exchange between the
currencies in which its positions are traded and the U.S. dollar. Because of the
Latin America Growth Fund's policy of investing primarily in securities of
foreign issuers, and specifically of Latin American issuers, an investment in
the Latin America Growth Fund requires consideration of certain factors that are
not typically associated with investing in securities of most U.S. issuers. Risk
factors associated with investment in the Latin America Growth Fund include: (1)
political, economic and certain other risks, such as expropriation,
nationalization or confiscation of the Latin America Growth Fund's assets or the
imposition of restrictions on foreign investment or the repatriation of capital
invested; (2) religious, political and ethnic instability; (3) custodial,
pricing and settlement issues; (4) the economic condition of Latin American
countries; (5) non-uniform accounting, auditing and corporate disclosure
standards and governmental regulation which may lead to less publicly available
and less reliable information concerning Latin American issuers than is
typically the case with respect to U.S. issuers; (6) less regulation of Latin
American securities markets generally than is the case in the U.S.; (7) currency
fluctuations; (8) the risk of currency devaluation; (9) high levels of
inflation; (10) smaller, less developed, less liquid and more volatile markets
than the major U.S. securities markets; and (11) the imposition of foreign
withholding taxes on the investment income and trading profits of the Latin
America Growth Fund.
Trading in Sovereign Debt involves a high degree of risk. The issuer of the debt
or the governmental authorities that control the repayment of the debt may be
unable or unwilling to repay principal and/or interest when due in accordance
with the terms of such debt. Sovereign Debt in which the Latin America Growth
Fund will invest is widely considered to have a credit quality below investment
grade as determined by U.S. rating agencies (and as low as securities rated C by
Standard & Poor's Ratings Group ("S&P") or Moody's Investors Service, Inc.
("Moody's")). As a result, Sovereign Debt may be regarded as predominantly
speculative with respect to the issuer's capacity to pay interest and repay
principal in accordance with the terms of the obligations and involves major
risk exposure to adverse conditions.
The Latin America Growth Fund normally invests in a substantial number of
issuers; however, the Fund's classification as a non-diversified investment
company under the Investment Company Act of 1940, as amended ("1940 Act") means
that the Latin America Growth Fund may invest a larger percentage of its assets
in individual issuers than a diversified investment company. As a result, its
exposure to credit and market risks associated with each such issuer is
increased. See "Risk Factors" and "Other Information."
EXPENSES. Each Fund pays G.T. Capital investment management and administration
fees, based on the average daily net assets of the Fund, at the annualized rate
of .975% on the first $500 million, .95% on the next $500 million, .925% on the
next $500 million, and .90% on amounts thereafter. G.T. Capital has undertaken
to limit each Fund's expenses exclusive of brokerage commissions, taxes,
interest and extraordinary expenses to the annual rate of 1.90% of the average
daily net assets of Fund's Advisory Class shares.
Prospectus Page 6
<PAGE>
G.T. GLOBAL EMERGING MARKETS FUND
G.T. LATIN AMERICA GROWTH FUND
PROSPECTUS SUMMARY
(Continued)
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G.T. GLOBAL EMERGING MARKETS FUND
SUMMARY OF INVESTOR COSTS. The expenses and maximum transaction costs associated
with investing in the Advisor Class shares of the Emerging Markets Fund are
reflected in the following tables*:
<TABLE>
<CAPTION>
ADVISOR
CLASS
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<S> <C>
SHAREHOLDER TRANSACTION COSTS
Maximum sales charge on purchases (as a % of offering price)................................................ None
Sales charges on reinvested distributions to shareholders................................................... None
Maximum contingent deferred sales charge.................................................................... None
Redemption charges.......................................................................................... None
Exchange fees:
-- On first four exchanges each year...................................................................... None
-- On each additional exchange............................................................................ $ 7.50
ANNUAL FUND OPERATING EXPENSES
(AS A % OF AVERAGE NET ASSETS)
Investment management and administration fees............................................................... 0.97%
12b-1 service and distribution fees......................................................................... None
Other expenses.............................................................................................. 0.57%
-----
Total Fund Operating Expenses............................................................................... 1.56%
-----
-----
</TABLE>
HYPOTHETICAL EXAMPLE OF EFFECT OF EXPENSES:
An investor directly or indirectly would have paid the following expenses at the
end of the periods shown on a $1,000 investment, assuming a 5% annual return*:
<TABLE>
<CAPTION>
ONE THREE FIVE TEN
YEAR YEARS YEARS YEARS
---- ----- ----- -----
<S> <C> <C> <C> <C>
Advisor Class Shares........................................ $16 $ 48 N/A N/A
<FN>
- ------------------
* BECAUSE ADVISOR CLASS SHARES HAVE NOT PREVIOUSLY BEEN OFFERED, EXPENSES ARE
ESTIMATES AND DO NOT REFLECT ACTUAL ADVISOR CLASS EXPENSES. SUCH DATA ARE
DERIVED FROM CLASS A AND CLASS B SHARE EXPENSES FOR THE FUND'S FISCAL YEAR
ENDED OCTOBER 31, 1994. THESE TABLES ARE INTENDED TO ASSIST INVESTORS IN
UNDERSTANDING THE VARIOUS COSTS AND EXPENSES ASSOCIATED WITH INVESTING IN
THE FUND. "Other expenses" include custody, transfer agent, legal, audit
and other expenses. The transfer agent fees are calculated on a per account
and per transaction basis rather than on the basis of average net assets.
"Other expenses" may be reduced to the extent that (i) certain
broker/dealers executing the Fund's portfolio transactions pay all or a
portion of the Fund's custodian fees and transfer agency expenses, or (ii)
fees reduced in connection with the lending of portfolio securities are
used to reduce custodian fees. These arrangements are not anticipated to
materially increase the brokerage commissions paid by the Fund. Without
such reductions, "Other Expenses" for Advisor Class shares of the Fund is
estimated to be 0.59%. See "Management" herein and in the Statement of
Additional Information for more information. Investors purchasing Advisor
Class shares through financial planners, trust companies, bank trust
departments or registered investment advisers, or under a "wrap fee"
program, will be subject to additional fees charged by such entities or by
the sponsors of such programs. Where any account advised by one of the
companies comprising or affiliated with the G.T. Group invests in Advisor
Class shares of the Fund, such account shall not be subject to duplicative
advisory fees. THE "HYPOTHETICAL EXAMPLE" SET FORTH ABOVE IS NOT A
REPRESENTATION OF PAST OR FUTURE EXPENSES; THE FUND'S ACTUAL EXPENSES MAY
BE MORE OR LESS THAN THOSE SHOWN. The above table and the assumption in the
Hypothetical Example of a 5% annual return are required by regulation of
the Securities and Exchange Commission applicable to all mutual funds; the
5% annual return is not a prediction of and does not represent the Fund's
projected or actual performance.
</TABLE>
Prospectus Page 7
<PAGE>
G.T. GLOBAL EMERGING MARKETS FUND
G.T. LATIN AMERICA GROWTH FUND
PROSPECTUS SUMMARY
(Continued)
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G.T. LATIN AMERICA GROWTH FUND
SUMMARY OF INVESTOR COSTS. The expenses and maximum transaction costs associated
with investing in the Advisor Class shares of the Latin America Growth Fund are
reflected in the following tables*:
<TABLE>
<CAPTION>
ADVISOR
CLASS
-----------
<S> <C>
SHAREHOLDER TRANSACTION COSTS:
Maximum sales charge on purchases of shares (% of offering price)........................................... None
Sales charges on reinvested distributions to shareholders................................................... None
Maximum contingent deferred sales charges................................................................... None
Redemption charges.......................................................................................... None
Exchange fees:
-- On first four exchanges each year.................................................................... None
-- On each additional exchange.......................................................................... $ 7.50
ANNUAL FUND OPERATING EXPENSES:
(AS A % OF AVERAGE NET ASSETS)
Investment management and administration fees............................................................... 0.97%
12b-1 distribution and service fees......................................................................... None
Other expenses.............................................................................................. 0.57%
-----------
Total Fund Operating Expenses................................................................................. 1.54%
-----------
-----------
</TABLE>
HYPOTHETICAL EXAMPLE OF EFFECT OF EXPENSES:
An investor would have directly or indirectly paid the following expenses at the
end of the periods shown on a $1,000 investment in the Fund, assuming a 5%
annual return*:
<TABLE>
<CAPTION>
ONE THREE FIVE TEN
YEAR YEARS YEARS YEARS
---- ----- ----- -----
<S> <C> <C> <C> <C>
Advisor Class Shares..................................................................... $15 $ 48 N/A N/A
<FN>
- ------------------
* BECAUSE ADVISOR CLASS SHARES HAVE NOT PREVIOUSLY BEEN OFFERED, EXPENSES ARE
ESTIMATES AND DO NOT REFLECT ACTUAL ADVISOR CLASS EXPENSES. SUCH DATA ARE
DERIVED FROM CLASS A AND CLASS B SHARE EXPENSES FOR THE FUND'S FISCAL YEAR
ENDED OCTOBER 31, 1994. EXCHANGE FEE WAIVERS ARE AVAILABLE FOR ADVISORS
CLASS SHARES. THESE TABLES ARE INTENDED TO ASSIST INVESTORS IN
UNDERSTANDING THE VARIOUS COSTS AND EXPENSES ASSOCIATED WITH INVESTING IN
THE FUND. "Other expenses" include custody, transfer agent, legal, audit
and other expenses. "Other expenses" may be reduced to the extent that (i)
certain broker/dealers executing the Fund's portfolio transactions pay all
or a portion of the Fund's custodian and transfer agency expenses, or (ii)
fees received in connection with the lending of portfolio securities are
used to reduce custodian fees. These arrangements are not anticipated to
materially increase the brokerage commissions paid by the Fund. Without
such reductions, "Other Expenses" for Advisor Class shares of the Fund is
estimated to be 0.57%. See "Management" herein and in the Statement of
Additional Information for more information. Investors purchasing Advisor
Class shares through financial planners, trust companies, bank trust
departments or registered investment advisers, or under a "wrap fee"
program, will be subject to additional fees charged by such entities or by
the sponsors of such programs. Where any account advised by one of the
companies comprising or affiliated with the G.T. Group invests in Advisor
Class shares of the Fund, such account shall not be subject to duplicative
advisory fees. THE "HYPOTHETICAL EXAMPLE" SET FORTH ABOVE IS NOT A
REPRESENTATION OF PAST OR FUTURE EXPENSES; THE FUND'S ACTUAL EXPENSES MAY
BE MORE OR LESS THAN THOSE SHOWN. The above tables and the assumption in
the Hypothetical Example of a 5% annual return are required by regulation
of the SEC applicable to all mutual funds; the 5% annual return is not a
prediction of and does not represent the Fund's projected or actual
performance.
</TABLE>
Prospectus Page 8
<PAGE>
G.T. GLOBAL EMERGING MARKETS FUND
G.T. LATIN AMERICA GROWTH FUND
FINANCIAL HIGHLIGHTS
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The tables below provide condensed information concerning income and capital
changes for one share of each class of shares of each Fund for the periods
shown. This information is supplemented by the financial statements and
accompanying notes appearing in the Statement of Additional Information. The
financial statements and notes, for the fiscal year ended October 31, 1994, have
been audited by Coopers & Lybrand L.L.P., independent accountants, whose report
thereon also is included in the Statement of Additional Information. Financial
information is not presented for Advisor Class shares because no shares of that
class were outstanding during the periods presented below.
G.T. GLOBAL EMERGING MARKETS FUND
<TABLE>
<CAPTION>
CLASS B+ CLASS A++
-------------------------- ---------------------------------------------
APRIL 1, MAY 18, 1992
YEAR ENDED 1993 TO YEAR ENDED YEAR ENDED (COMMENCEMENT OF
OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31, OPERATIONS) TO
1994 1993 1994 1993 OCTOBER 31, 1992
----------- ------------ ----------- ----------- -----------------
<S> <C> <C> <C> <C> <C> <C>
Per share operating performance:
Net asset value, beginning of year......... $ 14.39 $ 11.47 $ 14.42 $ 11.10 $ 11.43
----------- ------------ ----------- ----------- --------
Income from investment operations:
Net investment income (loss)............... (0.12) 0.00** (0.02) 0.02* 0.07*
Net realized and unrealized gain (loss) on
investments.............................. 4.67 2.92 4.68 3.38 (0.40)
----------- ------------ ----------- ----------- --------
Net increase (decrease) from investment
operations............................... 4.55 2.92 4.66 3.40 (0.33)
----------- ------------ ----------- ----------- --------
Distributions:
Net investment income.................... (0.00) (0.00) (0.01) (0.08) (0.00)
Net realized gain on investments......... (0.26) (0.00) (0.26) (0.00) (0.00)
----------- ------------ ----------- ----------- --------
Total distributions.................... (0.26) (0.00) (0.27) (0.08) (0.00)
----------- ------------ ----------- ----------- --------
Net asset value, end of year............... $ 18.68 $ 14.39 $ 18.81 $ 14.42 $ 11.10
----------- ------------ ----------- ----------- --------
----------- ------------ ----------- ----------- --------
Total investment returns (c)............... 31.77% 25.5%(a) 32.58% 30.9% (2.9)%(a)
----------- ------------ ----------- ----------- --------
----------- ------------ ----------- ----------- --------
Ratios and supplemental data:
Net assets, end of year (in 000's)......... $291,289 $ 32,218 $417,322 $187,808 $ 84,558
Ratio of net investment income (loss) to
average net assets....................... (0.61)% (0.4)% *(b) (0.11)% 0.1%* 1.7%*(b)
Ratio of expenses to average net assets.... 2.56% 2.9%**(b) 2.06% 2.4%* 2.4%*(b)
Portfolio turnover rate +++................ 100% 99% 100% 99% 32%(b)
<FN>
- ------------------
+ Commencing April 1, 1993, the Fund began offering Class B shares.
++ All capital shares issued and outstanding as of March 31, 1993 were
reclassified as Class A shares.
+++ Portfolio turnover is calculated on the basis of the Fund as a whole
without distinguishing between the classes of shares issued.
* Includes reimbursement by G.T. Capital Management, Inc. of Fund Class A
shares operating expenses of $0.02 for the year ended October 31, 1993 and
for the period from May 18, 1992 (commencement of operations) to October
31, 1992. Without such reimbursement, the expense ratios would have been
2.61% and 2.91% and the ratio of net investment income to average net
assets would have been 0.36% and 1.21% for the year ended October 31, 1993
and for the period from May 18, 1992 (commencement of operations) to
October 31, 1992, respectively.
** Includes reimbursement by G.T. Capital Management, Inc. of Fund Class B
shares operating expenses of $0.02. Without such reimbursement, the expense
ratio would have been 3.63% and the ratio of net investment income to
average net assets would have been (0.76)%.
(a) Not annualized.
(b) Annualized.
(c) Total investment return does not include sales charges.
</TABLE>
Prospectus Page 9
<PAGE>
G.T. GLOBAL EMERGING MARKETS FUND
G.T. LATIN AMERICA GROWTH FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
G.T. LATIN AMERICA GROWTH FUND
<TABLE>
<CAPTION>
CLASS B+ CLASS A++
---------------------------- ---------------------------------------------
APRIL 1, 1993 AUGUST 13, 1991
YEAR ENDED TO YEAR ENDED OCTOBER 31, (COMMENCEMENT OF
OCTOBER 31, OCTOBER 31, --------------------------- OPERATIONS) TO
1994(A) 1993(A) 1994(A) 1993(A) 1992 OCTOBER 31, 1991
----------- -------------- -------- -------- ------- ----------------
<S> <C> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of year... $19.75 $16.26 $19.78 $15.59 $16.45 $14.29
----------- -------------- -------- -------- ------- ----------------
Income from investment operations:
Net investment income (loss)......... (0.22) (0.07) (0.08) 0.18* 0.25* 0.01*
Net realized and unrealized gain
(loss) on investments.............. 6.74 3.56 6.75 5.21 (0.98) 2.15
----------- -------------- -------- -------- ------- ----------------
Net increase (decrease) from
investment operations.............. 6.52 3.49 6.67 5.39 (0.73) 2.16
----------- -------------- -------- -------- ------- ----------------
Distributions:
Net investment income.............. (0.18) (0.00) (0.19) (0.12) (0.13) (0.00)
Net realized gain on investments... (0.15) (0.00) (0.15) (1.08) (0.00) (0.00)
----------- -------------- -------- -------- ------- ----------------
Total distributions.............. (0.33) (0.00) (0.34) (1.20) (0.13) (0.00)
----------- -------------- -------- -------- ------- ----------------
Net asset value, end of year......... $25.94 $19.75 $26.11 $19.78 $15.59 $16.45
----------- -------------- -------- -------- ------- ----------------
----------- -------------- -------- -------- ------- ----------------
Total investment return (d).......... 33.33% 21.5%(b) 34.10% 37.1% (4.5)% 15.1%(b)
----------- -------------- -------- -------- ------- ----------------
----------- -------------- -------- -------- ------- ----------------
Ratios and supplemental data:
Net assets, end of year (in 000's)... $211,673 $13,576 $336,960 $129,280 $94,085 $125,038
Ratio of net investment income (loss)
to average net assets.............. (0.79)% (0.7)%(c) (0.29)% 1.3%* 1.3%* 1.2%*(c)
Ratio of expenses to average net
assets............................. 2.54% 2.9%(c) 2.04% 2.4%* 2.4%* 2.4%*(c)
Portfolio turnover rate +++.......... 155% 112% 155% 112% 159% none
<FN>
- ------------------
+ Commencing April 1, 1993, the Fund began offering Class B shares.
++ All capital shares issued and outstanding as of March 31, 1993 were
reclassified as Class A shares.
+++ Portfolio turnover is calculated on the basis of the Fund as a whole
without distinguishing between the classes of shares issued.
* Includes reimbursement by G.T. Capital Management, Inc. of Fund Class A
operating expenses of $0.02, $0.04 and $0.01 for the years ended October
31, 1993 and 1992 and for the period from August 13, 1991 to October 31,
1991, respectively. Without such reimbursements, the expense ratios for
Class A would have been 2.49%, 2.62% and 3.42% and the ratios of net
investment income to average net assets would have been 1.25%, 1.07% and
0.l5% for the years ended October 31, 1993 and 1992 and for the period from
August 31, 1991 to October 31, 1991, respectively.
(a) These selected per share data were calculated based upon weighted average
shares outstanding during the period.
(b) Not annualized.
(c) Annualized.
(d) Total investment return does not include sales charges.
</TABLE>
Prospectus Page 10
<PAGE>
G.T. GLOBAL EMERGING MARKETS FUND
G.T. LATIN AMERICA GROWTH FUND
INVESTMENT OBJECTIVES
AND POLICIES
- --------------------------------------------------------------------------------
EMERGING MARKETS FUND
The Emerging Markets Fund's investment objective is long-term growth of capital.
Under normal circumstances, the Emerging Markets Fund seeks its objective by
investing at least 65% of its total assets in equity securities of companies in
emerging markets. The Emerging Markets Fund may invest in the following types of
equity securities: common stock, preferred stock, securities convertible into
common stock and rights and warrants to acquire such securities and
substantially similar forms of equity with comparable risk characteristics.
These securities may be listed on securities exchanges, traded in various
over-the-counter ("OTC") markets, or have no organized market.
For purposes of the Emerging Markets Fund's operations, "emerging markets" will
consist of all countries determined by G.T. Capital to have developing or
emerging economies and markets. These countries generally include every country
in the world except the United States, Canada, Japan, Australia, New Zealand and
most countries located in Western Europe. See "Investment Objective and
Policies" in the Statement of Additional Information for a complete list of all
the countries which the Emerging Markets Fund does not consider to be emerging
markets.
The Emerging Markets Fund will focus its investments in those emerging markets
which G.T. Capital believes have strongly developing economies and in which the
markets are becoming more sophisticated. For purposes of the Emerging Markets
Fund's policy of normally investing at least 65% of its total assets in equity
securities of issuers in emerging markets, the Emerging Markets Fund will
consider investment in the following emerging markets:
<TABLE>
<S> <C>
Argentina Mauritius
Bolivia Mexico
Botswana Morocco
Brazil Nigeria
Chile Pakistan
China Peru
Colombia Philippines
Cyprus Poland
Czech Republic Portugal
Ecuador Singapore
Egypt Slovakia
Ghana Slovak Republic
Greece South Korea
Hong Kong Sri Lanka
Hungary Swaziland
India Taiwan
Indonesia Thailand
Israel Turkey
Jamaica Uruguay
Jordan Venezuela
Kenya Zimbabwe
Malaysia
</TABLE>
Although the Emerging Markets Fund considers each of the above-listed countries
eligible for investment pursuant to the above described 65% of total assets
investment policy, the Emerging Markets Fund will not be invested in all such
markets at all times. Moreover, investing in some of those markets currently may
not be desirable or feasible, due to the lack of adequate custody arrangements
for the Emerging Markets Fund's assets, overly burdensome repatriation and
similar restrictions, the lack of organized and liquid securities markets,
unacceptable political risks or for other reasons.
As used in this Prospectus, a company in an emerging market is an entity: (i)
for which the principal securities trading market is an emerging market, as
defined above; (ii) that (alone or on a consolidated basis) derives 50% or more
of its total revenue from either goods produced, sales made or services
performed in emerging markets; or (iii) organized under the laws of, and with a
principal office in, an emerging market.
In managing the Emerging Markets Fund, G.T. Capital seeks to identify those
countries and industries where economic and political factors, including
currency movements, are likely to produce above-average growth rates. G.T.
Capital then seeks to invest in those companies in such countries and industries
that are best positioned and managed to take advantage of these economic and
political factors. The assets of the Emerging Markets Fund ordinarily will be
invested in the securities of issuers in at least three different
Prospectus Page 11
<PAGE>
G.T. GLOBAL EMERGING MARKETS FUND
G.T. LATIN AMERICA GROWTH FUND
emerging markets. The Emerging Markets Fund may invest up to 15% of its net
assets in illiquid securities.
Under normal circumstances, the Emerging Markets Fund may invest up to 35% of
its total assets in a combination of (i) debt securities of government or
corporate issuers in emerging markets; (ii) equity and debt securities of
issuers in developed countries, including the United States; (iii) securities of
issuers in emerging markets not included in the list of emerging markets above,
if investing therein becomes feasible and desirable subsequent to the date of
this Prospectus; and (iv) cash and money market instruments. In evaluating
investments in securities of issuers in developed markets, G.T. Capital will
consider, among other things, the business activities of the issuer in emerging
markets and the impact that developments in emerging markets are likely to have
on the issuer.
INVESTMENTS IN DEBT SECURITIES. Capital appreciation in debt securities in which
the Emerging Markets Fund invests may arise as a result of favorable changes in
relative foreign exchange rates, in relative interest rate levels and/or in the
creditworthiness of issuers. The receipt of income from debt securities owned by
the Emerging Markets Fund is incidental to the Emerging Markets Fund's objective
of long-term growth of capital.
The Emerging Markets Fund may invest in debt securities of both governmental and
corporate issuers in emerging markets. Emerging market debt securities often are
rated below investment grade. "Investment grade" debt securities are those rated
within the four highest ratings categories of S&P or Moody's or, if unrated,
determined by G.T. Capital to be of comparable quality. Securities rated BBB by
S&P and Baa by Moody's are investment grade debt securities but are considered
to have speculative characteristics. Many emerging market debt securities are
not rated by U.S. ratings agencies. The Emerging Markets Fund may also use
instruments (including forward contracts) often referred to as "derivatives."
See "Options, Futures and Forward Currency Transactions."
The Emerging Markets Fund will not invest more than 20% of its total assets in
debt securities rated below investment grade. Investment in non-investment grade
debt securities involves a high degree of risk and can be speculative. These
debt securities are the equivalent of high yield, high risk bonds, commonly
known as "junk bonds." See "Risk Factors" for a more complete discussion.
If the rating of any of the Emerging Markets Fund's investments drops below a
minimum rating considered acceptable by G.T. Capital for investment by the
Emerging Markets Fund, the Fund will dispose of any such security as soon as
practicable and consistent with the best interests of the Emerging Markets Fund
and its shareholders.
INVESTMENT IN OTHER INVESTMENT COMPANIES OR VEHICLES. Certain emerging markets
are closed in whole or in part to equity investments by foreigners. The Emerging
Markets Fund may be able to invest in such markets solely or primarily through
governmentally authorized investment vehicles or companies. Pursuant to the 1940
Act, The Emerging Markets Fund generally may invest up to 10% of its total
assets in the aggregate in shares of other investment companies and up to 5% of
its total assets in any one investment company, as long as each investment does
not represent more than 3% of the outstanding voting stock of the acquired
investment company at the time of investment.
Investment in other investment companies may involve the payment of substantial
premiums above the value of such investment companies' portfolio securities, and
is subject to limitations under the 1940 Act and market availability. The
Emerging Markets Fund does not intend to invest in such investment companies
unless, in the judgment of G.T. Capital, the potential benefits of such
investment justify the payment of any applicable premium or sales charge. As a
shareholder in an investment company, the Emerging Markets Fund would bear its
ratable share of that investment company's expenses, including its advisory and
administration fees. At the same time the Emerging Markets Fund would continue
to pay its own management fees and other expenses.
TEMPORARY DEFENSIVE STRATEGIES. The Emerging Markets Fund has the flexibility to
respond promptly to changes in market and economic conditions. In the interest
of preserving shareholders' capital, G.T. Capital may employ a temporary
defensive investment strategy if it determines such a strategy to be warranted
due to market conditions. Pursuant to such a defensive strategy, the Emerging
Markets Fund temporarily may hold cash (U.S. dollars, foreign currencies,
multinational currency units) and/or invest up to 100% of its assets in high
Prospectus Page 12
<PAGE>
G.T. GLOBAL EMERGING MARKETS FUND
G.T. LATIN AMERICA GROWTH FUND
quality debt securities or money market instruments of U.S. or foreign issuers,
and most or all of the Emerging Markets Fund's investments may be made in the
United States and denominated in U.S. dollars. To the extent the Emerging
Markets Fund adopts a temporary defensive posture, it will not be invested so as
to achieve directly its investment objective.
In addition, pending investment of proceeds from new sales of Emerging Markets
Fund shares or to meet ordinary daily cash needs, the Emerging Markets Fund
temporarily may hold cash (U.S. dollars, foreign currencies or multinational
currency units) and may invest any portion of its assets in money market
instruments.
The Emerging Markets Fund may invest in the following types of money market
instruments (i.e., debt instruments with less than 12 months remaining until
maturity) denominated in U.S. dollars or other currencies: (a) obligations
issued or guaranteed by the U.S. or foreign governments, their agencies,
instrumentalities or municipalities; (b) obligations of international
organizations designed or supported by multiple foreign governmental entities to
promote economic reconstruction or development; (c) finance company obligations,
corporate commercial paper and other short-term commercial obligations; (d) bank
obligations (including certificates of deposit, time deposits, demand deposits
and bankers' acceptances), subject to the restriction that the Fund may not
invest more than 25% of its total assets in bank securities; (e) repurchase
agreements with respect to the foregoing; and (f) other substantially similar
short-term debt securities with comparable characteristics.
The Emerging Markets Fund may invest in commercial paper rated as low as A-3 by
S&P or P-3 by Moody's or, if unrated, determined by G.T. Capital to be of
comparable quality. Obligations rated A-3 and P-3 are considered by S&P and
Moody's, respectively, to have an acceptable capacity for timely repayment.
However, these securities may be more vulnerable to adverse effects of changes
in circumstances than obligations carrying higher designations.
BORROWING. It is a fundamental policy of the Emerging Markets Fund that it may
borrow an amount up to 33 1/3% of its total assets in order to meet redemption
requests. Borrowing may cause greater fluctuation in the value of Emerging
Markets Fund shares than would be the case if the Emerging Markets Fund did not
borrow, but also may enable the Emerging Markets Fund to retain favorable
securities positions rather than liquidating such positions to meet redemptions.
The Emerging Markets Fund will not borrow to leverage its portfolio. It is a
nonfundamental policy of the Emerging Markets Fund that it will not purchase
securities during times when outstanding borrowings represent 5% or more of its
total assets.
SECURITIES LENDING. The Emerging Markets Fund is authorized to make loans of its
portfolio securities to broker/dealers or to other institutional investors. At
all times a loan is outstanding, the Emerging Markets Fund requires the borrower
to maintain with the Emerging Markets Fund's custodian collateral consisting of
cash, U.S. government securities or other liquid, high grade debt securities at
least equal to the value of the borrowed securities, plus any accrued interest.
The Emerging Markets Fund will receive any interest paid on the loaned
securities and a fee and/or a portion of the interest earned on the collateral.
The Emerging Markets Fund will limit its loans of portfolio securities to an
aggregate of 30% of the value of its total assets, measured at the time any such
loan is made. The risks in lending portfolio securities, as with other
extensions of secured credit, consist of possible delay in receiving additional
collateral or in recovery of the loaned securities or possible loss of rights in
the collateral should the borrower fail financially.
LATIN AMERICA GROWTH FUND
The Latin America Growth Fund's investment objective is capital appreciation.
The Latin America Growth Fund normally invests at least 65% of its total assets
in a broad range of securities of Latin American issuers. Though the Latin
America Growth Fund may invest throughout Latin America, under current market
conditions the Latin America Growth Fund expects to invest primarily in equity
and debt securities issued by companies and governments in Mexico, Chile, Brazil
and Argentina.
Consistent with its investment objective and policies, the Latin America Growth
Fund may invest in common stock, preferred stock, rights, warrants and
securities convertible into common stock, and other substantially similar forms
of equity with comparable risk characteristics, as well as bonds, notes,
debentures or other forms of indebtedness that may be developed in the future.
These securities may be listed on securities exchanges, traded
Prospectus Page 13
<PAGE>
G.T. GLOBAL EMERGING MARKETS FUND
G.T. LATIN AMERICA GROWTH FUND
in various OTC markets or have no organized market.
The Latin America Growth Fund will purchase equity and debt securities in
seeking its objective of capital appreciation. Capital appreciation in debt
securities may arise as a result of a favorable change in relative foreign
exchange rates, in relative interest rate levels, or in the creditworthiness of
issuers. The receipt of income from such debt securities is incidental to the
Latin America Growth Fund's objective of capital appreciation.
The Latin America Growth Fund defines securities of Latin American issuers as
the following: (a) securities of companies organized under the laws of, or with
a principal office located in a Latin American country or for which the
principal trading market is in Latin America; (b) securities issued or
guaranteed by the government of a country in Latin America, its agencies or
instrumentalities, or municipalities, or the central bank of such country; (c)
dollar-denominated securities or securities denominated in a Latin American
currency issued by companies to finance operations in Latin America; (d)
securities of companies that derive at least 50% of their revenues from either
goods or services produced in Latin America or sales made in Latin America; and
(e) securities of Latin American issuers, as defined herein, in the form of
depositary shares. For purposes of the foregoing definition, the Latin America
Growth Fund's purchases of securities issued by companies outside of Latin
America to finance their Latin American operations will be limited to securities
the performance of which is materially related to such company's Latin American
activities. For purposes of this Prospectus, unless otherwise indicated, the
Latin America Growth Fund defines Latin America to consist of the following
countries: Argentina, the Bahamas, Barbados, Belize, Bolivia, Brazil, Chile,
Colombia, Costa Rica, Dominican Republic, Ecuador, El Salvador, French Guiana,
Guatemala, Guyana, Haiti, Honduras, Jamaica, Mexico, the Netherlands Antilles,
Nicaragua, Panama, Paraguay, Peru, Suriname, Trinidad and Tobago, Uruguay and
Venezuela.
ALLOCATION OF THE LATIN AMERICA GROWTH FUND'S INVESTMENTS. The extent of the
Latin America Growth Fund's holdings in any Latin American country will vary
from time to time, based upon G.T. Capital's judgment as to where the greatest
investment opportunities then lie. In allocating investments among the various
Latin American markets, G.T. Capital looks principally at the stage of
industrialization, potential for productivity gains through economic
deregulation, the impact of financial liberalization and monetary conditions and
the political outlook in each country. The Latin America Growth Fund intends to
focus its investments in securities in Mexico, Chile, Brazil and Argentina,
which currently have the most developed capital markets in Latin America. The
Latin America Growth Fund may invest more than 25% of its total assets in any of
these four countries but does not expect to invest more than 50% of its total
assets in any one country.
The portion of the Latin America Growth Fund's total assets invested directly in
Chile may be less than the portions invested in other Latin American countries,
particularly Mexico, because, at present, with limited exceptions, capital
invested directly in Chile normally cannot be repatriated for at least one year.
In addition, repatriation restrictions apply to investments made under the debt
conversion programs in some countries.
Normally, the Latin America Growth Fund will invest a majority of its assets in
equity securities. The percentage distribution between equity and debt will vary
from country to country. The following factors, among others, will influence the
proportion of the Latin America Growth Fund's assets to be invested in equity
versus debt: level and anticipated direction of interest rates; expected rates
of economic growth and corporate profits growth; changes in Latin American
government policy including regulation governing industry, trade, financial
markets, foreign and domestic investment; substance and likely development of
government finances; and the condition of the balance of payments and changes in
the terms of trade.
Under normal circumstances, the Latin America Growth Fund may invest up to 35%
of its total assets in a combination of equity and debt securities of U.S.
issuers. In evaluating investments in securities of U.S. issuers, G.T. Capital
will consider, among other things, the issuer's Latin American business
activities and the impact that development in Latin America may have on the
issuer's operations and financial condition.
Certain sectors of the economies of certain Latin American countries are closed
to equity investments by foreigners. Further, due to the absence of securities
markets and publicly owned corporations and due to restrictions on direct
investment by foreign entities in certain Latin American countries, the Latin
America Growth Fund may be able to
Prospectus Page 14
<PAGE>
G.T. GLOBAL EMERGING MARKETS FUND
G.T. LATIN AMERICA GROWTH FUND
invest in such countries solely or primarily through governmentally approved
investment vehicles or companies. For example, due to Chile's current investment
restrictions, the Latin America Growth Fund intends initially to limit most of
its Chilean investments to indirect investments through American Depositary
Receipts ("ADRs") and established Chilean investment companies, the shares of
which are not subject to repatriation restrictions. Accordingly, as a result of
the current limitations on investment by the Latin America Growth Fund in
securities of other investment companies described below, the Fund's investment
in Chile would not likely exceed 15% of its total assets.
INVESTMENTS IN DEBT SECURITIES. Under normal circumstances, the Latin America
Growth Fund may invest up to 50% of its total assets in debt securities. There
is no limitation on the percentage of the Latin America Growth Fund's assets
which may be invested in debt securities which are rated BB or lower by S&P or
Ba or lower by Moody's or, if unrated, are deemed by G.T. Capital to be of
comparable quality. These debt securities are the equivalent of high yield, high
risk bonds, commonly known as "junk bonds." Most debt securities in which the
Latin America Growth Fund will invest are not rated; if rated, it is expected
that such ratings would be below investment grade. However, the Latin America
Growth Fund will not invest in debt securities that are in default in payment as
to principal or interest. See "Risk Factors -- Risks Associated with Debt
Securities." The Latin America Growth Fund may also use instruments (including
forward contracts) often referred to as "derivatives." See "Options, Futures and
Forward Currency Transactions."
During 1990, the Mexican external debt markets experienced significant changes
with the completion of the "Brady Plan" restructurings in those markets. The
restructurings provided for the exchange of loans and cash for newly issued
bonds ("Brady Bonds"). Brady Bonds fall into two categories: collateralized
Brady Bonds and bearer Brady Bonds. Both types of Brady Bonds are issued in
various currencies, primarily the U.S. dollar. Brady Bonds are actively traded
in the OTC secondary market for Latin American debt. U.S. dollar-denominated
collateralized bonds, which may be fixed par bonds or floating rate discount
bonds, are collateralized in full as to principal by U.S. Treasury Zero Coupon
bonds having the same maturity. At least one year of rolling interest payments
are collateralized by cash or other investments. Brady Bonds have been issued by
Argentina, Brazil, Bulgaria, Costa Rica, Dominican Republic, Jordan, Mexico,
Nigeria, Philippines, Poland, Uruguay, Venezuela and are expected to be issued
by Ecuador and other emerging market countries. Approximately $136 billion in
principal amount of Brady Bonds are outstanding, the largest proportion having
been issued by Brazil and Argentina. Brady Bonds issued by Brazil and Argentina
currently are rated below investment grade.
INVESTMENT IN OTHER INVESTMENT COMPANIES
OR VEHICLES. Under the 1940 Act, the Latin America Growth Fund generally may
invest up to 10% of its total assets in shares of other investment companies and
up to 5% of its total assets in any one investment company, or acquire up to 3%
of the voting stock of any one investment company. Investment in other
investment companies or vehicles may be the most practical or only manner in
which the Latin America Growth Fund can participate in certain Latin American
securities markets. Such investment may involve the payment of substantial
premiums above the value of such issuers' portfolio securities, and is subject
to limitations under the 1940 Act and market availability. There can be no
assurance that vehicles for investing in certain Latin American countries will
be available for investment, particularly in the early stages of the Latin
America Growth Fund's operations. The Latin America Growth Fund does not intend
to invest in such vehicles or funds unless, in the judgment of G.T. Capital, the
potential benefits of such investment justify the payment of any applicable
premium or sales charge. As a shareholder in an investment company, the Latin
America Growth Fund would bear its ratable share of that investment company's
expenses, including its advisory and administration fees. At the same time the
Latin America Growth Fund would continue to pay its own management fees and
other expenses.
Prospectus Page 15
<PAGE>
G.T. GLOBAL EMERGING MARKETS FUND
G.T. LATIN AMERICA GROWTH FUND
TEMPORARY DEFENSIVE STRATEGIES. The Latin America Growth Fund may hold cash
(U.S. dollars, foreign currencies, multinational units) and/or invest up to 100%
of its total assets in money market securities (as defined herein) to generate
income to defray Latin America Growth Fund expenses, for temporary defensive
purposes and pending investment in accordance with the Latin America Growth
Fund's investment objective and policies. In addition, the Latin America Growth
Fund reserves the right to be primarily invested in U.S. securities for
temporary defensive purposes or pending investment of the proceeds of sales of
new shares of the Fund. The Latin America Growth Fund may assume a temporary
defensive position when, due to political, market or other factors broadly
affecting Latin American markets, G.T. Capital determines that opportunities for
capital appreciation in those markets would be significantly limited over an
extended period, or that investing in those markets presents undue risk of loss.
Money market securities are defined as short-term debt securities (less than 13
months to maturity) denominated in U.S. dollars or in the currency of any Latin
American country, which consist of: (a) obligations issued or guaranteed by (i)
the U.S. government or the government of a Latin American country, their
agencies or instrumentalities, or municipalities or (ii) international
organizations designed or supported by multiple foreign governmental entities to
promote economic reconstruction or development ("supranational entities"); (b)
finance company obligations, corporate commercial paper and other short-term
commercial obligations; (c) bank obligations (including certificates of deposit,
time deposits, demand deposits and bankers' acceptances), subject to the
restriction that the Latin America Growth Fund may not invest more than 25% of
its total assets in bank securities; (d) repurchase agreements with respect to
the foregoing; and (e) other substantially similar short-term debt securities
with comparable risk characteristics.
The Latin America Growth Fund may invest in commercial paper rated as low as A-3
by S&P or P-3 by Moody's. Such obligations are considered to have an acceptable
capacity for timely repayment. However, these securities may be more vulnerable
to adverse effects or changes in circumstances than obligations carrying higher
designations.
The banks whose obligations may be purchased by the Latin America Growth Fund
and the banks and broker/dealers with whom the Latin America Growth Fund may
enter into repurchase agreements (as defined below) include any member bank of
the Federal Reserve System, and any broker/ dealer or any foreign bank whose
creditworthiness has been determined by G.T. Capital, in accordance with
guidelines approved by the Company's Board of Directors, to be at least equal to
that of issuers of commercial paper that the Latin America Growth Fund may
purchase, as described above. G.T. Capital will review and monitor the
creditworthiness of such institutions under the Board's general supervision. In
this regard, G.T. Capital will consider, among other factors, the capitalization
of the institution, G.T. Capital's prior dealings with the institution, any
rating of the institution's senior long term debt by independent rating agencies
and other factors G.T. Capital deems appropriate.
ADDITIONAL INVESTMENT POLICIES OF EMERGING MARKETS FUND AND LATIN AMERICA GROWTH
FUND
REPURCHASE AGREEMENTS. Repurchase agreements are transactions in which the
Emerging Markets Fund or the Latin America Growth Fund purchases a security from
a bank or recognized securities dealer and simultaneously commits to resell that
security to the bank or dealer at an agreed-upon price, date and market rate of
interest separate from the coupon rate and maturity of the purchased security.
The Latin America Growth Fund and the Emerging Markets Fund will invest only in
repurchase agreements collateralized at all times in an amount at least equal to
the repurchase price plus accrued interest. To the extent that the proceeds from
any sale of such collateral upon a default in the obligation to repurchase were
less than the repurchase price, the Latin America Growth Fund or the Emerging
Markets Fund would suffer a loss. The Latin America Growth Fund and the Emerging
Markets Fund will enter into repurchase agreements only with banks and broker/
dealers believed by G.T. Capital to present minimal credit risks in accordance
with guidelines approved by the Company's Board of Directors. G.T. Capital will
review and monitor the creditworthiness of such institutions under the Board's
general supervision. See "Investment Objectives and Policies -- Repurchase
Agreements" in the Funds' Statements of Additional Information.
PRIVATIZATIONS. The governments in some emerging markets and Latin American
countries have been engaged in programs of selling part or all of their
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G.T. GLOBAL EMERGING MARKETS FUND
G.T. LATIN AMERICA GROWTH FUND
stakes in government owned or controlled enterprises ("privatizations"). G.T.
Capital believes that privatizations may offer opportunities for significant
capital appreciation, and intends to invest assets of the Emerging Markets Fund
and Latin America Growth Fund in privatizations in appropriate circumstances. In
certain emerging markets and Latin American countries, the ability of foreign
entities such as the Emerging Markets Fund and Latin America Growth Fund to
participate in privatizations may be limited by local law and/or the terms on
which the Emerging Markets Fund and Latin America Growth Fund may be permitted
to participate may be less advantageous than those afforded local investors.
There can be no assurance that Latin American governments and governments in
emerging markets will continue to sell companies currently owned or controlled
by them or that privatization programs will be successful.
WHEN-ISSUED AND FORWARD COMMITMENT SECURITIES. The Emerging Markets Fund and the
Latin America Growth Fund may purchase debt securities on a "when-issued" basis
and may purchase or sell such securities on a "forward commitment" basis in
order to hedge against anticipated changes in interest rates and prices. The
price, which is generally expressed in yield terms, is fixed at the time the
commitment is made, but delivery and payment for the securities take place at a
later date. When-issued securities and forward commitments may be sold prior to
the settlement date, but the Funds will enter into when-issued and forward
commitments only with the intention of actually receiving or delivering the
securities, as the case may be. No income accrues on securities which have been
purchased pursuant to a forward commitment or on a when-issued basis prior to
delivery to the Emerging Markets Fund or the Latin America Growth Fund. If the
Emerging Markets Fund or the Latin America Growth Fund disposes of the right to
acquire a when-issued security prior to its acquisition or disposes of its right
to deliver or receive against a forward commitment, it may incur a gain or loss.
At the time the Emerging Markets Fund or the Latin America Growth Fund enters
into a transaction on a when-issued or forward commitment basis, a segregated
account consisting of cash or high grade liquid debt securities equal to the
value of the when-issued or forward commitment securities will be established
and maintained with that Fund's custodian bank and will be marked to market
daily. There is a risk that the securities may not be delivered and that the
Funds may incur a loss. The Emerging Markets and the Latin America Growth Fund
also may enter into reverse repurchase agreements, although (i) the Emerging
Markets Fund currently does not intend to do so and (ii) the Latin America
Growth Fund may not enter into such agreements, with respect to more than 5% of
its total assets.
OPTIONS, FUTURES AND FORWARD CURRENCY TRANSACTIONS. In seeking to protect
against the effect of adverse changes in the financial markets in which the
Emerging Markets Fund and the Latin America Growth Fund invests, or against
currency exchange rate or interest rate changes that are adverse to the present
or prospective positions of the Emerging Markets Fund and the Latin America
Growth Fund, both Funds may use forward currency contracts, options on
securities, options on indices, options on currencies, and futures contracts and
options on futures contracts on U.S. and foreign government securities and
currencies. These instruments are often referred to as "derivatives," which may
be defined as financial instruments whose performance is derived, at least in
part, from the performance of another asset (such as a security, currency or an
index of securities). Each Fund may enter into such instruments up to the full
value of its portfolio assets. There can be no assurance that a Fund's risk
management policies will succeed. These techniques are described below and are
further detailed in the Statement of Additional information.
Only a limited market, if any, currently exists for options and futures
transactions relating to currencies of most emerging markets and most Latin
American markets, to securities denominated in such currencies or to securities
of issuers domiciled or principally engaged in business in such emerging
markets. To the extent that such a market does not exist, G.T. Capital may not
be able to effectively hedge its investment in such Latin American and emerging
markets.
In addition, each Fund may purchase and sell put and call options on securities
to hedge against the risk of fluctuations in the prices of securities held by
the Fund or that G.T. Capital intends to include in the Fund's portfolio. The
Funds also may buy and sell put and call options on indices. Such index options
serve to hedge against overall fluctuations in the securities markets or market
sectors generally, rather than anticipated increases or decreases in the value
of a particular security.
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G.T. GLOBAL EMERGING MARKETS FUND
G.T. LATIN AMERICA GROWTH FUND
Further, the Funds may sell index futures contracts and may purchase put options
or write call options on such futures contracts to protect against a general
market or market sector decline that could adversely affect the Fund's
portfolio. The Funds also may buy index futures contracts and purchase call
options or write put options on such contracts to hedge against a general market
or market sector advance and thereby attempt to lessen the cost of future
securities acquisitions. A Fund may use interest rate futures contracts and
options thereon to hedge against changes in the general level of interest rates.
The Emerging Markets Fund and the Latin America Growth Fund may write and
purchase put and call options on securities, indices and currencies that are
traded on recognized securities exchanges and on over-the-counter ("OTC")
markets.
These practices may result in the loss of principal under certain conditions. In
addition, certain provisions of the Internal Revenue Code of 1986, as amended
("Code"), have the effect of limiting the extent to which the Emerging Markets
Fund and the Latin America Growth Fund may enter into forward contracts or
futures contracts, or engage in options transactions. See "Taxes" in the
Statement of Additional Information.
To attempt to hedge against adverse movements in exchange rates between
currencies, the Emerging Markets Fund and the Latin America Growth Fund may
enter into forward currency contracts for the purchase or sale of a specified
currency at a specified future date. Such contracts may involve the purchase or
sale of a foreign currency against the U.S. dollar or may involve two foreign
currencies. The Emerging Markets Fund and the Latin America Growth Fund may each
enter into forward currency contracts either with respect to specific
transactions or with respect to its portfolio positions. For example, when the
Emerging Markets Fund or the Latin America Growth Fund anticipates making a
purchase or sale of a security, it may enter into a forward currency contract in
order to set the rate (either relative to the U.S. dollar or another currency)
at which a currency exchange transaction related to the purchase or sale will be
made. Further, when G.T. Capital believes that a particular currency may decline
compared to the U.S. dollar or another currency, the Emerging Markets Fund or
the Latin America Growth Fund may enter into a forward contract to sell the
currency G.T. Capital expects to decline in an amount up to the value of that
Fund's portfolio securities denominated in a foreign currency. The Emerging
Markets Fund and the Latin America Growth Fund may also purchase put or call
options on currencies, futures contracts on currencies and options and options
on futures contracts on currencies to hedge against movements in exchange rates.
Although either Fund might not employ any of the foregoing strategies, its use
of forward currency contracts, futures contracts, and options would involve
certain investment risks and transaction costs to which it might not otherwise
be subject. These risks include: (1) dependence on G.T. Capital's ability to
predict movements in the prices of individual securities, fluctuations in the
general securities markets and movements in interest rates and currency markets;
(2) imperfect correlation, or even no correlation, between movements in the
price of forward contracts, options, futures contracts or options thereon and
movements in the price of the currency or security hedged or used for cover; (3)
the fact that skills and techniques needed to trade options, futures contracts
and options thereon or to use forward currency contracts are different from
those needed to select the securities in which the Emerging Markets Fund and the
Latin America Growth Fund invests; (4) lack of assurance that a liquid secondary
market will exist for any particular option, futures contract or option thereon
at any particular time; (5) the possible inability of a Fund to purchase or sell
a portfolio security at a time when it would otherwise be favorable for it to do
so, or the possible need for a Fund to sell a security at a disadvantageous
time, due to the need for the Fund to maintain "cover" or to segregate
securities in connection with hedging transactions; and (6) the possible need of
a Fund to defer closing out of certain options, futures contracts and options
thereon and forward currency contracts in order to qualify or continue to
qualify for the beneficial tax treatment afforded regulated investment companies
under the Code. See "Dividends, Other Distributions and Federal Income Taxation"
herein and "Taxes" in the Statement of Additional Information. If G.T. Capital
incorrectly forecasts securities markets movements, currency exchange rates or
interest rates in utilizing a strategy for a Fund, it would be in a better
position if it had not hedged at all. The Emerging Markets Fund and the Latin
America Growth Fund may each also conduct its foreign currency exchange
transactions on a spot (I.E., cash) basis at the spot rate prevailing in the
foreign currency exchange market.
Prospectus Page 18
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G.T. GLOBAL EMERGING MARKETS FUND
G.T. LATIN AMERICA GROWTH FUND
RISK FACTORS
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EMERGING MARKETS FUND
The Emerging Markets Fund's net asset value will fluctuate, reflecting
fluctuations in the market value of its portfolio positions and its net currency
exposure. There is no assurance that the Emerging Markets Fund will achieve its
investment objective.
G.T. Capital believes that the issuers of securities in emerging markets often
have sales and earnings growth rates which exceed those in developed countries
and that such growth rates may in turn be reflected in more rapid share price
appreciation. Accordingly, G.T. Capital believes that the Emerging Markets
Fund's policy of investing in equity securities in emerging markets may enable
the Emerging Markets Fund to achieve results superior to those produced by
mutual funds with similar objectives to those of the Emerging Markets Fund that
invest solely in equity securities of issuers domiciled in the U.S. and/or in
other developed markets.
Nonetheless, investing in the Emerging Markets Fund entails a substantial degree
of risk. Because of the special risks associated with investing in emerging
markets, an investment in the Emerging Markets Fund should be considered
speculative. Investors are strongly advised to consider carefully the special
risks involved in emerging markets, which are in addition to the usual risks of
investing in developed markets around the world.
Investing in emerging markets involves risks relating to potential political and
economic instability within such markets and the risks of expropriation,
nationalization, confiscation of assets and property or the imposition of
restrictions on foreign investment and on repatriation of capital invested. In
the event of such expropriation, nationalization or other confiscation in any
emerging market, the Emerging Markets Fund could lose its entire investment in
that market.
Economies in individual emerging markets may differ favorably or unfavorably
from the U.S. economy in such respects as growth of gross domestic product,
rates of inflation, currency depreciation, capital reinvestment, resource self-
sufficiency and balance of payments positions. Many emerging market countries
have experienced substantial, and in some periods extremely high, rates of
inflation for many years. Inflation and rapid fluctuations in inflation rates
have had and may continue to have very negative effects on the economies and
securities markets of certain countries with emerging markets.
Economies in emerging markets generally are dependent heavily upon international
trade and, accordingly, have been and may continue to be affected adversely by
trade barriers, exchange controls, managed adjustments in relative currency
values and other protectionist measures imposed or negotiated by the countries
with which they trade. These economies also have been and may continue to be
affected adversely by economic conditions in the countries in which they trade.
The securities markets of emerging countries are substantially smaller, less
developed, less liquid and more volatile than the securities markets of the
United States and other more developed countries. Disclosure and regulatory
standards in many respects are less stringent than in the U.S. and other major
markets. There also may be a lower level of monitoring and regulation of
emerging markets and the activities of investors in such markets, and
enforcement of existing regulations has been extremely limited.
The securities of non-U.S. issuers generally are not registered with the SEC,
nor are the issuers thereof usually subject to the SEC's reporting requirements.
Accordingly, there may be less publicly available information about foreign
securities and issuers than is available with respect to U.S. securities and
issuers. Foreign companies generally are not subject to uniform accounting,
auditing and financial reporting standards, practices and requirements
comparable to those applicable to U.S. companies. The Emerging Markets Fund's
net investment income and/or capital gains from its foreign investment
activities may be subject to non-U.S. withholding taxes.
In addition, brokerage commissions, custodial services and other costs relating
to investment in foreign markets generally are more expensive than in the United
States, particularly with respect to
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G.T. GLOBAL EMERGING MARKETS FUND
G.T. LATIN AMERICA GROWTH FUND
emerging markets. Such markets have different settlement and clearance
procedures. In certain markets there have been times when settlements have been
unable to keep pace with the volume of securities transactions, making it
difficult to conduct such transactions. The inability of the Emerging Markets
Fund to make intended securities purchases due to settlement problems could
cause the Emerging Markets Fund to miss attractive investment opportunities.
Inability to dispose of a portfolio security caused by settlement problems could
result either in losses to the Emerging Markets Fund due to subsequent declines
in value of the portfolio security or, if the Emerging Markets Fund has entered
into a contract to sell the security, could result in possible liability to the
purchaser.
The risk also exists that an emergency situation may arise in one or more
emerging markets as a result of which trading of securities may cease or may be
substantially curtailed and prices for the Emerging Markets Fund's portfolio
securities in such markets may not be readily available. Section 22(e) of the
1940 Act permits a registered investment company, such as the Emerging Markets
Fund, to suspend redemption of its shares for any period during which an
emergency exists, as determined by the SEC. Accordingly, when the Emerging
Markets Fund believes that circumstances dictate, it will promptly apply to the
SEC for a determination that such an emergency exists within the naming of
Section 22(e) of the 1940 Act. During the period commencing from the Emerging
Markets Fund's identification of such conditions until the date of any SEC
action, the Emerging Markets Fund's portfolio securities in the affected markets
will be valued at fair value determined in good faith by or under the direction
of the Company's Board of Directors.
LATIN AMERICA GROWTH FUND. Pursuant to the 1940 Act, the Latin America Growth
Fund's classification as a non-diversified investment company allows it, with
respect to 50% of its assets, to invest more than 5% of its total assets in the
securities of any issuer. Consequently, as the Latin America Growth Fund will be
invested in the securities of a limited number of Latin American issuers, the
performance of any single issuer may have a more significant effect upon the
overall performance of the Latin America Growth Fund than if the Latin America
Growth Fund was a diversified investment company.
The Latin America Growth Fund normally invests at least 65% of its total assets
in the securities of Latin American issuers. Accordingly, an investment in the
Latin America Growth Fund requires consideration of certain factors not
typically associated with investing in most U.S. issuers.
Investing in securities of Latin American issuers may entail risks relating to
the potential political and economic instability of certain Latin American
countries and the risks of expropriation, nationalization, confiscation or the
imposition of restrictions on foreign investment and on repatriation of capital
invested. In the event of such expropriation, nationalization or other
confiscation by any country, the Latin America Growth Fund could lose its entire
investment in any such country.
The securities markets of Latin American countries are substantially smaller,
less developed, less liquid and more volatile than the major securities markets
in the United States. Disclosure and regulatory standards are in many respects
less stringent than U.S. standards. Furthermore, there is a lower level of
monitoring and regulation of the markets and the activities of investors in such
markets, and enforcement of existing regulations has been extremely limited.
The limited size of many Latin American securities markets and limited trading
volume in issuers compared to volume of trading in U.S. securities could cause
prices to be erratic for reasons apart from factors that affect the quality of
the securities. For example, limited market size may cause prices to be unduly
influenced by traders who control large positions. Adverse publicity and
investors' perceptions, whether or not based on fundamental analysis, may
decrease the value and liquidity of portfolio securities, especially in these
markets.
Further, there is a risk that an emergency situation may arise in one or more
Latin American markets as a result of which prices for portfolio securities in
such markets may not be readily available. Accordingly, when the Latin America
Growth Fund believes that circumstances dictate, it will follow the procedures
as described above concerning the Emerging Markets Fund.
The Latin America Growth Fund may not invest more than 10% of its net assets in
illiquid securities. The Latin America Growth Fund will treat any Latin American
securities that are subject to restrictions on repatriation for more than seven
days, as well as any securities issued in connection with Latin
Prospectus Page 20
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G.T. GLOBAL EMERGING MARKETS FUND
G.T. LATIN AMERICA GROWTH FUND
American debt conversion programs that are restricted as to remittance of
invested capital or profits, as illiquid securities for purposes of this
limitation. The Latin America Growth Fund will also treat repurchase agreements
with maturities in excess of seven days as illiquid securities.
The Latin America Growth Fund invests in securities denominated in currencies of
Latin American countries. Accordingly, changes in the value of these currencies
against the U.S. dollar will result in corresponding changes in the U.S. dollar
value of the Latin America Growth Fund's assets denominated in those currencies.
Such changes will also affect the Latin America Growth Fund's income.
In addition, many of the currencies of Latin American countries have experienced
steady devaluations relative to the U.S. dollar, and major devaluations have
historically occurred in certain countries.
Some Latin American countries also may have managed currencies which are not
free floating against the U.S. dollar. In addition, there is a risk that certain
Latin American countries may restrict the free conversion of their currencies
into other currencies. Further, certain Latin American currencies may not be
internationally traded. Certain of these currencies have experienced a steady
devaluation relative to the U.S. dollar. Any devaluations in the currencies in
which the Latin America Growth Fund's portfolio securities are denominated may
have a detrimental impact on the Latin America Growth Fund.
Most Latin American countries have experienced substantial, and in some periods
extremely high, rates of inflation for many years. Inflation and rapid
fluctuations in inflation rates have had and may continue to have very negative
effects on the economies and securities markets of certain Latin American
countries.
The economies of individual Latin American countries may differ favorably or
unfavorably from the U.S. economy in such respects as the rate of growth of
gross domestic product, the rate of inflation, capital reinvestment, resource
self-sufficiency and balance of payments position. Expropriation, confiscatory
taxation, nationalization, political, economic or social instability or other
developments could adversely affect the assets of the Latin America Growth Fund
held in particular Latin American countries. Furthermore, certain Latin American
countries may impose withholding taxes on dividends payable to the Latin America
Growth Fund at a higher rate than those imposed by other foreign countries. This
may reduce the Latin America Growth Fund's investment income available for
distribution to shareholders.
Companies in Latin America are subject to accounting, auditing and financial
standards and requirements that differ, in some cases significantly, from those
applicable to U.S. companies. There is substantially less publicly available
information about Latin American companies and the governments of Latin American
countries than there is about U.S. companies and the U.S. Government.
Certain Latin American countries are among the largest debtors to commercial
banks and foreign governments. Currently, Brazil is the largest debtor among
developing countries, Mexico is the second largest and Argentina the third. At
times certain Latin American countries have declared moratoria on the payment of
principal and/or interest on external debt.
Investment in Sovereign Debt involves a high degree of risk. The issuers or
governmental authorities that control the repayment of Sovereign Debt may not be
able or willing to make principal and/or interest payments when due in
accordance with the terms of such debt. Investors should be aware that the
Sovereign Debt instruments in which the Latin America Growth Fund may invest
involve great risk and are deemed to be the equivalent in terms of quality to
securities rated below investment grade by Moody's and S&P. A substantial
portion of the Sovereign Debt in which the Fund will invest, including Brady
Bonds, is issued as part of debt restructurings and such debt is to be
considered speculative. There is a history of defaults with respect to
commercial bank loans by public and private entities issuing Brady Bonds.
The Latin America Growth Fund and G.T. Capital believe that carefully selected
investments in joint ventures, cooperatives, partnerships and state enterprises
and other similar vehicles which are illiquid (collectively, "Special
Situations") could enable the Latin America Growth Fund to achieve capital
appreciation substantially exceeding the appreciation the Latin America Growth
Fund would realize if it did not make such investments. However, in order to
limit investment risk, the Latin America Growth Fund will invest no more than 5%
of its total assets in Special Situations.
RISKS ASSOCIATED WITH DEBT SECURITIES. The value of the debt securities held by
the Emerging Markets Fund or by the Latin America Growth
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G.T. GLOBAL EMERGING MARKETS FUND
G.T. LATIN AMERICA GROWTH FUND
Fund generally will vary inversely with market interest rates. If interest rates
in a market fall, the Funds' debt securities issued by governments or companies
in that market ordinarily will rise. If market interest rates increase, however,
the debt securities owned by the Funds in that market will be likely to decrease
in value.
As discussed above, the Emerging Markets Fund may invest up to 20% of its total
assets in debt securities rated below investment grade and the Latin America
Growth Fund may invest up to 50% of its total assets in debt securities. Such
investments involve a high degree of risk.
Debt rated BB, B, CCC, CC and C and debt rated Ba, B, Caa, Ca, C is regarded by
S&P and Moody's, respectively, on balance, as predominantly speculative with
respect to the issuer's capacity to pay interest and repay principal in
accordance with the terms of the obligation. For S&P, BB indicates the lowest
degree of speculation and C the highest degree of speculation. For Moody's, Ba
indicates the lowest degree of speculation and C the highest degree of
speculation. While such debt will likely have some quality and protective
characteristics, these are outweighed by large uncertainties or major risk
exposures to adverse conditions. Similarly, debt rated Ba or BB and below is
regarded by the relevant rating agency as speculative. Debt rated C by Moody's
or S&P is the lowest rated debt that is not in default as to principal or
interest and such issues so rated can be regarded as having extremely poor
prospects of ever attaining any real investment standing. Such securities are
also generally considered to be subject to greater risk than securities with
higher ratings with regard to a deterioration of general economic conditions.
These foreign debt securities are the equivalent of high yield, high risk bonds,
commonly known as "junk bonds."
Ratings of debt securities represent the rating agency's opinion regarding their
quality and are not a guarantee of quality. Rating agencies attempt to evaluate
the safety of principal and interest payments and do not evaluate the risks of
fluctuations in market value. Also, rating agencies may fail to make timely
changes in credit ratings in response to subsequent events, so that an issuer's
current financial condition may be better or worse than a rating indicates.
The market values of lower quality debt securities tend to reflect individual
developments of the issuer to a greater extent than do higher quality
securities, which react primarily to fluctuations in the general level of
interest rates. In addition, lower quality debt securities tend to be more
sensitive to economic conditions and generally have more volatile prices than
higher quality securities. Issuers of lower quality securities are often highly
leveraged and may not have available to them more traditional methods of
financing. For example, during an economic downturn or a sustained period of
rising interest rates, highly leveraged issuers of lower quality securities may
experience financial stress. During such periods, such issuers may not have
sufficient revenues to meet their interest payment obligations. The issuer's
ability to service its debt obligations may also be adversely affected by
specific developments affecting the issuer, such as the issuer's inability to
meet specific projected business forecasts or the unavailability of additional
financing. Similarly, certain emerging market and Latin American governments
that issue lower quality debt securities are among the largest debtors to
commercial banks, foreign governments and supranational organizations such as
the World Bank and may not be able or willing to make principal and/or interest
repayments as they come due. The risk of loss due to default by the issuer is
significantly greater for the holders of lower quality securities because such
securities are generally unsecured and are often subordinated to other creditors
of the issuer.
Lower quality debt securities frequently have call or buy-back features which
would permit an issuer to call or repurchase the security from the Funds. In
addition, the Funds may have difficulty disposing of lower quality securities
because they may have a thin trading market. There may be no established retail
secondary market for many of these securities, and either Fund anticipates that
such securities could be sold only to a limited number of dealers or
institutional investors. The lack of a liquid secondary market also may have an
adverse impact on market prices of such instruments and may make it more
difficult for the Funds to obtain accurate market quotations for purposes of
valuing the Funds' portfolios. The Funds may also acquire lower quality debt
securities during an initial underwriting or which are sold without registration
under applicable securities laws. Such securities involve special considerations
and risks.
In addition to the foregoing, factors that could have an adverse effect on the
market value of lower quality debt securities in which the Funds may invest
include: (i) potential adverse publicity;
Prospectus Page 22
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G.T. GLOBAL EMERGING MARKETS FUND
G.T. LATIN AMERICA GROWTH FUND
(ii) heightened sensitivity to general economic or political conditions; and
(iii) the likely adverse impact of a major economic recession.
The Funds may also incur additional expenses to the extent either is required to
seek recovery upon a default in the payment of principal or interest on its
portfolio holdings, and the Funds may have limited legal recourse in the event
of a default. Debt securities issued by governments in emerging or Latin
American markets can differ from debt obligations issued by private entities in
that remedies from defaults generally must be pursued in the courts of the
defaulting government, and legal recourse is therefore somewhat diminished.
Political conditions, in terms of a government's willingness to meet the terms
of its debt obligations, also are of considerable significance. There can be no
assurance that the holders of commercial bank debt may not contest payments to
the holders of debt securities issued by governments in emerging or Latin
American markets in the event of default by the governments under commercial
bank loan agreements.
G.T. Capital attempts to minimize the speculative risks associated with
investments in lower quality securities through credit analysis and by carefully
monitoring current trends in interest rates, political developments and other
factors. Nonetheless, investors should carefully review the investment objective
and policies of the Fund and consider their ability to assume the investment
risks involved before making an investment.
CURRENCY RISK. Since the Emerging Markets Fund and the Latin America Growth Fund
may invest substantially in securities denominated in currencies other than the
U.S. dollar, and since the Funds may hold foreign currencies, each Fund will be
affected favorably or unfavorably by exchange control regulations or changes in
the exchange rates between such currencies and the U.S. dollar. Changes in
currency exchange rates will influence the value of each Fund's shares, and also
may affect the value of dividends and interest earned by the Funds and gains and
losses realized by the Funds. Currencies generally are evaluated on the basis of
fundamental economic criteria (e.g., relative inflation and interest rate levels
and trends, growth rate forecasts, balance of payments status and economic
policies) as well as technical and political data. Exchange rates are determined
by the forces of supply and demand in the foreign exchange markets. These forces
are affected by the international balance of payments and other economic and
financial conditions, government intervention, speculation and other factors. If
the currency in which a security is denominated appreciates against the U.S.
dollar, the dollar value of the security will increase. Conversely, a decline in
the exchange rate of the currency would adversely affect the value of the
security expressed in dollars.
OTHER INFORMATION. The Latin America Growth Fund's and Emerging Markets Fund's
annual operating expenses, which are higher than those of many other investment
companies of comparable size, are believed by each Fund's management to be
comparable to expenses of other open-end management investment companies that
invest primarily in the securities of countries in a single geographic region or
regions.
The investment objective of the Latin America Growth Fund and of the Emerging
Markets Fund may not be changed without the approval of a majority of the
respective Fund's outstanding voting securities. As defined in the 1940 Act and
as used in this Prospectus, a "majority of the Fund's outstanding voting
securities" means the lesser of (i) 67% of the shares represented at a meeting
at which more than 50% of the outstanding shares are represented, or (ii) more
than 50% of the outstanding shares. In addition, the Latin America Growth Fund
and the Emerging Markets Fund each have adopted certain investment limitations
as fundamental policies which also may not be changed without shareholder
approval. A complete description of these limitations is included in the
Statement of Additional Information. Unless specifically noted, the Latin
America Growth Fund's and the Emerging Markets Fund's investment policies
described in this Prospectus and in the Statement of Additional Information are
not fundamental policies which may be changed by a vote of a majority of the
Company's Board of Directors without shareholder approval. See "Investment
Limitations" in the Statement of Additional Information.
Prospectus Page 23
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G.T. GLOBAL EMERGING MARKETS FUND
G.T. LATIN AMERICA GROWTH FUND
HOW TO INVEST
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GENERAL. Advisor Class shares are offered through this Prospectus to (a)
trustees or other fiduciaries purchasing shares for employee benefit plans which
are sponsored by organizations which have at least 250 employees; (b) any
account investing at least $25,000 in one or more G.T. Global Mutual Funds if
(i) a financial planner, trust company, bank trust department or registered
investment adviser has investment discretion over such account, and (ii) the
account holder pays such person as compensation for its advice and other
services an annual fee of at least .50% on the assets in the account ("Advisory
Account"); (c) any account investing at least $25,000 in one or more G.T. Global
Mutual Funds if (i) such account is established under a "wrap fee" program, and
(ii) the account holder pays the sponsor of such program an annual fee of least
.50% on the assets in the account ("Wrap Fee Account"); (d) accounts advised by
one of the companies comprising or affiliated with the G.T. Group; and (e) any
of the companies comprising or affiliated with the G.T. Group. Financial
planners, trust companies, bank trust companies and registered investment
advisers referenced in subpart (b) and sponsors of "wrap fee" programs
referenced in subpart (c) are collectively referred to as "Financial Advisors."
Investors in Wrap Fee Accounts and Advisory Accounts may only purchase Advisor
Class shares through Financial Advisors who have entered into agreements with
G.T. Global and certain of its affiliates.
Investors known to be eligible to purchase Advisor Class shares will be sold
only Advisor Class shares rather than any other class of shares offered by a
Fund.
Orders received by G.T. Global before the close of regular trading on the New
York Stock Exchange ("NYSE") (currently, 4:00 P.M. Eastern time, unless weather,
equipment failure or other factors contribute to an earlier closing time), on
any Business Day will be executed at the public offering price for the
applicable class of shares determined that day. A "Business Day" is any day
Monday through Friday on which the NYSE is open for business. All purchase
orders will be executed at the public offering price next determined after the
purchase order is received. The Funds and G.T. Global reserve the right to
reject any purchase order and to suspend the offering of shares for a period of
time.
Fiduciaries and Financial Advisors may be required to provide information
satisfactory to G.T. Global concerning their eligibility to purchase Advisor
Class shares. For specific information on opening an account, please contact
your Financial Advisor or G.T. Global.
PURCHASES BY BANK WIRE. Shares of the Funds may also be purchased through G.T.
Global by bank wire. Bank wire purchases will be effected at the next determined
public offering price after the bank wire is received. Accordingly, a bank wire
received by the close of regular trading on the NYSE, on a Business Day, will be
effected that day. A wire investment is considered received when the Transfer
Agent is notified that the bank wire has been credited to a Fund. Prior
telephonic or facsimile notice that a bank wire is being sent must be provided
to the Transfer Agent. An investor's bank may charge a service fee for wiring
money to the Funds. The Transfer Agent currently does not charge a service fee
for facilitating wire purchases, but reserves the right to do so in the future.
For more information, please refer to the Shareholder Account Manual in this
Prospectus.
CERTIFICATES. In the interest of economy and convenience, physical certificates
representing a Fund's shares will not be issued unless an investor submits a
written request to the Transfer Agent, or unless the investor's Financial
Advisor requests that the Transfer Agent provide certificates. Shares of a Fund
are recorded on a register by the Transfer Agent, and shareholders who do not
elect to receive certificates have the same rights of ownership as if
certificates had been issued to them. Redemptions and exchanges by shareholders
who hold certificates may take longer to effect than similar transactions
involving non-certificated shares because the physical delivery and processing
of properly executed certificates is required. ACCORDINGLY, THE FUNDS AND G.T.
GLOBAL RECOMMEND THAT SHAREHOLDERS DO NOT REQUEST ISSUANCE OF CERTIFICATES.
Prospectus Page 24
<PAGE>
G.T. GLOBAL EMERGING MARKETS FUND
G.T. LATIN AMERICA GROWTH FUND
HOW TO MAKE EXCHANGES
- --------------------------------------------------------------------------------
Advisor Class shares of any Fund may only be exchanged for Advisor Class shares
of the other G.T. Global Mutual Funds based on their respective net asset
values, provided that the registration remains identical. This exchange
privilege is available only in those jurisdictions where the sale of G.T. Global
Mutual Fund shares to be acquired may be legally made. EXCHANGES ARE NOT
TAX-FREE AND MAY RESULT IN A SHAREHOLDER'S REALIZING A GAIN OR LOSS, AS THE CASE
MAY BE, FOR TAX PURPOSES. See "Dividends, Other Distributions and Federal Income
Taxation."
Other than the Funds, the G.T. Global Mutual Funds currently include:
-- G.T. GLOBAL: WORLDWIDE GROWTH FUND
-- G.T. GLOBAL: INTERNATIONAL GROWTH FUND
-- G.T. GLOBAL FINANCIAL SERVICES FUND
-- G.T. GLOBAL INFRASTRUCTURE FUND
-- G.T. GLOBAL NATURAL RESOURCES FUND
-- G.T. GLOBAL CONSUMER PRODUCTS AND
SERVICES FUND
-- G.T. GLOBAL HEALTH CARE FUND
-- G.T. GLOBAL TELECOMMUNICATIONS FUND
-- G.T. GLOBAL: NEW PACIFIC GROWTH FUND*
-- G.T. GLOBAL: EUROPE GROWTH FUND
-- G.T. GLOBAL: AMERICA GROWTH FUND
-- G.T. GLOBAL: JAPAN GROWTH FUND
-- G.T. GLOBAL GROWTH & INCOME FUND
-- G.T. GLOBAL GOVERNMENT INCOME FUND
-- G.T. GLOBAL STRATEGIC INCOME FUND
-- G.T. GLOBAL HIGH INCOME FUND
-- G.T. GLOBAL DOLLAR FUND
- --------------
* Formerly, G.T. Pacific Growth Fund
Up to four exchanges each year may be made without charge. A $7.50 service
charge will be imposed on each subsequent exchange. Exchange requests received
in good order by the Transfer Agent before the close of regular trading on the
NYSE on any Business Day will be processed at the net asset value calculated on
that day.
EXCHANGES BY TELEPHONE. A shareholder may give exchange instructions to his or
her Financial Advisor. Exchange orders will be accepted by telephone provided
that the exchange involves only uncertificated shares on deposit in the
shareholder's account or for which certificates previously have been deposited.
Shareholders automatically have telephone privileges to authorize exchanges. The
Funds, G.T. Global and the Transfer Agent shall not be liable for any loss or
damage for acting in good faith upon instructions received by telephone and
reasonably believed to be genuine. The Funds employ reasonable procedures to
confirm that instructions communicated by telephone are genuine, including
requiring some form of personal identification prior to acting upon instructions
received by telephone, providing written confirmation of such transactions,
and/or tape recording of telephone instructions. The Funds may be liable for any
losses due to unauthorized or fraudulent instructions if they do not follow
reasonable procedures.
Investors in Wrap Fee Accounts and Advisory Accounts interested in making an
exchange should contact their Financial Advisor to request the prospectus of the
other G.T. Global Mutual Fund(s) being considered. Other investors should
contact G.T. Global. See the Shareholder Account Manual in this Prospectus for
additional information.
OTHER INFORMATION ABOUT EXCHANGES. Purchases, redemptions and exchanges should
be made for investment purposes only. A pattern of frequent exchanges, purchases
and sales is not acceptable and can be limited by a Fund's or G.T. Global's
refusal to accept further purchase and exchange orders. The terms of the
exchange offer described above may be modified at any time, on 60 days' prior
written notice.
Prospectus Page 25
<PAGE>
G.T. GLOBAL EMERGING MARKETS FUND
G.T. LATIN AMERICA GROWTH FUND
HOW TO REDEEM SHARES
- --------------------------------------------------------------------------------
Fund shares may be redeemed at their net asset value and redemption proceeds
will be sent within seven days of the execution of a redemption request.
Redemption requests may be transmitted to the Transfer Agent by telephone or by
mail, in accordance with the instructions provided in the Shareholder Account
Manual. All redemptions will be effected at the net asset value next determined
after the Transfer Agent has received the request and any required supporting
documentation. Redemption requests received before the close of regular trading
on the NYSE on any Business Day will be effected at the net asset value
calculated on that day. Redemption requests will not require a signature
guarantee if the redemption proceeds are to be sent either: (i) to the redeeming
shareholder at the shareholder's address of record as maintained by the Transfer
Agent, provided the shareholder's address of record has not been changed within
the preceding thirty days; or (ii) directly to a pre-designated bank, savings
and loan or credit union account ("Pre-Designated Account"). ALL OTHER
REDEMPTION REQUESTS MUST BE ACCOMPANIED BY A SIGNATURE GUARANTEE OF THE
REDEEMING SHAREHOLDER'S SIGNATURE. A signature guarantee can be obtained from
any bank, U.S. trust company, a member firm of a U.S. stock exchange or a
foreign branch of any of the foregoing or other eligible guarantor institution.
A notary public is not an acceptable guarantor.
Shareholders may qualify to have redemption proceeds sent to a Pre-Designated
Account by completing the appropriate section of the Account Application at the
end of this Prospectus. Shareholders with Pre-Designated Accounts should request
that redemption proceeds be sent either by bank wire or by check. The minimum
redemption amount for a bank wire is $1,000. Shareholders requesting a bank wire
should allow two business days from the time the redemption request is effected
for the proceeds to be deposited in the shareholder's Pre-Designated Account.
See "How to Redeem Shares -- Other Important Redemption Information."
Shareholders may change their Pre-Designated Accounts only by a letter of
instruction to the Transfer Agent containing all account signatures, each of
which must be guaranteed. The Transfer Agent currently does not charge a bank
wire service fee on each wire redemption sent, but reserves the right to do so
in the future. The shareholder's bank may charge a bank wire service fee.
REDEMPTIONS BY TELEPHONE. Redemption requests may be made by telephone by
calling the Transfer Agent at the appropriate toll free number provided in the
Shareholder Account Manual. Shareholders who hold certificates for shares may
not redeem by telephone. REDEMPTION REQUESTS MAY NOT BE MADE BY TELEPHONE FOR
THIRTY DAYS FOLLOWING ANY CHANGE OF THE SHAREHOLDER'S ADDRESS OF RECORD.
Shareholders automatically have telephone privileges to authorize redemptions.
The Funds, G.T. Global and the Transfer Agent shall not be liable for any loss
or damage for acting in good faith upon instructions received by telephone and
believed to be genuine. The Funds employ reasonable procedures to confirm that
instructions communicated by telephone are genuine, including requiring some
form of personal identification prior to acting upon instructions received by
telephone, providing written confirmation of such transactions, and/or tape
recording of telephone instructions. The Funds may be liable for any losses due
to unauthorized or fraudulent instructions if they do not follow reasonable
procedures.
REDEMPTIONS BY MAIL. Redemption requests should be mailed directly to the
Transfer Agent at the appropriate address provided in the Shareholder Account
Manual. As discussed above, requests for payment of redemption proceeds to a
party other than the shareholder of record and/or requests that redemption
proceeds be mailed to an address other than the shareholder's address of record
require a signature guarantee. In addition, if the shareholder's address of
record has been changed within the preceeding thirty days, a signature guarantee
is required. Redemptions of shares for which certificates have been issued must
be accompanied by properly endorsed share certificates.
OTHER IMPORTANT REDEMPTION INFORMATION. A request for redemption will not be
processed until all of the necessary documentation has been
Prospectus Page 26
<PAGE>
G.T. GLOBAL EMERGING MARKETS FUND
G.T. LATIN AMERICA GROWTH FUND
received in good order. A shareholder in a Wrap Fee Account or Advisory Account
who is in doubt as to what documents are required should contact his or her
Financial Advisor.
Except in extraordinary circumstances and as permitted under the 1940 Act,
payment for shares redeemed by telephone or by mail will be made promptly after
receipt of a redemption request, if in good order, but not later than seven days
after the date the request is executed. Requests for redemption which are
subject to any special conditions or which specify a future or past effective
date cannot be accepted.
If the Transfer Agent is requested to redeem shares for which a Fund has not yet
received good payment, the Fund may delay payment of redemption proceeds until
it has assured itself that good payment has been collected for the purchase of
the shares. In the case of purchases by check, it can take up to 10 business
days to confirm that the check has cleared and good payment has been received.
Redemption proceeds will not be delayed when shares have been paid for by wire
or when the investor's account holds a sufficient number of shares for which
funds already have been collected.
G.T. Global reserves the right to redeem the shares of any Advisory Account or
Wrap Fee Account if the amount invested in G.T. Global Mutual Funds through such
account is reduced to less than $25,000 through redemptions or other action by
the shareholder. Written notice will be given to the shareholder at least 60
days prior to the date fixed for such redemption, during which time the
shareholder may increase the amount invested in G.T. Global Mutual Funds through
such account to an aggregate amount of $25,000 or more.
For additional information on how to redeem Fund shares, see the Shareholder
Account Manual in this Prospectus or contact your Financial Advisor.
Prospectus Page 27
<PAGE>
G.T. GLOBAL EMERGING MARKETS FUND
G.T. LATIN AMERICA GROWTH FUND
SHAREHOLDER ACCOUNT MANUAL
- --------------------------------------------------------------------------------
Purchase, exchange and redemption orders should be placed in accordance with
this Manual. It is recommended that investors in Wrap Fee Accounts and Advisory
Accounts make such orders through their Financial Advisor. PLEASE BE CAREFUL TO
REFERENCE "ADVISOR CLASS" IN ALL INSTRUCTIONS PROVIDED. See "How to Invest;"
"How to Make Exchanges;" "How to Redeem Shares;" and "Dividends, Other
Distributions and Federal Income Taxation -- Taxes" for more information.
Each Funds' Transfer Agent is G.T. GLOBAL INVESTOR SERVICES, INC.
INVESTMENTS BY MAIL
Send completed Account Application (if initial purchase) or letter stating Fund
name, class of shares, shareholder's registered name and account number (if
subsequent purchase) with a check to:
G.T. Global
P.O. Box 7345
San Francisco, California 94120-7345
INVESTMENTS BY BANK WIRE
A new account may be opened by calling 1-800-223-2138 to obtain an account
number. WITHIN SEVEN DAYS OF PURCHASE A COMPLETED ACCOUNT APPLICATION CONTAINING
THE APPROPRIATE CERTIFIED TAXPAYER IDENTIFICATION NUMBER MUST BE SENT TO G.T.
GLOBAL AT THE ADDRESS PROVIDED ABOVE UNDER "INVESTMENTS BY MAIL." Wire
instructions must state Fund name, class of shares, shareholder's registered
name and account number. Bank wires should be sent through the Federal Reserve
Bank Wire System to:
WELLS FARGO BANK, N.A.
ABA 121000248
Attn: G.T. GLOBAL
ACCOUNT NO. 4023-050701
EXCHANGES BY TELEPHONE
Call G.T. Global at 1-800-223-2138
EXCHANGES BY MAIL
Send complete instructions, including name of Fund exchanging from, amount of
exchange, name of the G.T. Global Mutual Fund exchanging into, shareholder's
registered name and account number, to:
G.T. Global
P.O. Box 7893
San Francisco, California 94120-7893
REDEMPTIONS BY TELEPHONE
Call G.T. Global at 1-800-223-2138
REDEMPTIONS BY MAIL
Send complete instructions, including name of Fund, class of shares, amount of
redemption, shareholder's registered name and account number, to:
G.T. Global
P.O. Box 7893
San Francisco, California 94120-7893
OVERNIGHT MAIL
Overnight mail services do not deliver to post office boxes. To send purchase,
exchange or redemption orders by overnight mail, comply with the above
instructions but send to the following:
G.T. Global Investor Services
California Plaza
2121 N. California Boulevard
Suite 450
Walnut Creek, California 94596
ADDITIONAL QUESTIONS
Shareholders with additional questions regarding purchase, exchange and
redemption procedures may call G.T. Global at 1-800-223-2138.
Prospectus Page 28
<PAGE>
G.T. GLOBAL EMERGING MARKETS FUND
G.T. LATIN AMERICA GROWTH FUND
CALCULATION OF NET ASSET VALUE
- --------------------------------------------------------------------------------
Each Fund calculates its net asset value as of the close of regular trading on
the NYSE (currently, 4:00 p.m. Eastern time, unless weather, equipment failure
or other factors contribute to an earlier closing), each Business Day. Each
Fund's asset value per share is computed by determining the value of its total
assets (the securities it holds plus any cash or other assets, including
interest and dividends accrued but not yet received), subtracting all the Fund's
liabilities (including accrued expenses), and dividing the result by the total
number of shares outstanding at such time. Net asset value is determined
separately for each class of shares of each Fund.
Equity securities held by a Fund are valued at the last sale price on the
exchange or in the principal OTC market in which such securities are traded, as
of the close of business on the day the securities are being valued or, lacking
any sales, at the last available bid price. Long-term debt obligations are
valued at the mean of representative quoted bid or asked prices for such
securities, or, if such prices are not available, at prices for securities of
comparable maturity, quality and type; however, when G.T. Capital deems it
appropriate, prices obtained from a bond pricing service will be used. Short-
term debt investments are amortized to maturity based on their cost, adjusted
for foreign exchange translation and market fluctuations, provided that such
valuations represent fair value. When market quotations for futures and options
positions held by a Fund are readily available, those positions will be valued
based upon such quotations.
Securities and other assets for which market quotations are not readily
available are valued at fair value determined in good faith by or under
direction of the Company's Board of Directors. Securities quoted in foreign
currencies will be valued in U.S. dollars based on the prevailing exchange rates
on that day.
Each Fund's portfolio securities, from time to time, may be listed primarily on
foreign exchanges or OTC markets which trade on days when the NYSE is closed
(such as Saturday). As a result, the net asset values of the Funds may be
affected significantly by such trading on days when shareholders cannot purchase
or redeem shares of the Fund.
- --------------------------------------------------------------------------------
DIVIDENDS, OTHER DISTRIBUTIONS
AND FEDERAL INCOME TAXATION
- --------------------------------------------------------------------------------
DIVIDENDS AND OTHER DISTRIBUTIONS. Each Fund annually declares as a dividend all
its net investment income, if any, which includes dividends, accrued interest
and earned discount (including both original issue and market discounts) less
applicable expenses. Each Fund also normally distributes for each fiscal year
substantially all of its realized net short-term capital gain (the excess of
short-term capital gains over short-term capital losses), net capital gain (the
excess of net long-term capital gain over net short-term capital loss) and net
gains from foreign currency transactions, if any. Each Fund may make an
additional dividend or other distribution if necessary to avoid a 4% excise tax
on certain undistributed income and gain.
Dividends and other distributions paid by each Fund with respect to all classes
of its shares are calculated in the same manner and at the same time. The per
share income dividends on Advisor Class shares of a Fund will be higher than the
per share income dividends on shares of other classes of that Fund as a result
of the service and distribution fees applicable to those other shares.
SHAREHOLDERS MAY ELECT:
/ / to have all dividends and other distributions automatically reinvested in
additional Advisor Class shares of the distributing Fund (or other G.T.
Global Mutual Funds); or
/ / to receive dividends in cash and have other distributions automatically
reinvested in additional Advisor Class shares of the distributing Fund (or
other G.T. Global Mutual Funds); or
/ / to receive other distributions in cash and have dividends automatically
reinvested in additional
Prospectus Page 29
<PAGE>
G.T. GLOBAL EMERGING MARKETS FUND
G.T. LATIN AMERICA GROWTH FUND
Advisor Class shares of the distributing Fund (or other G.T. Global Mutual
Funds); or
/ / to receive dividends and other distributions in cash.
Automatic reinvestments in additional Advisor Class shares are made at net asset
value without imposition of a sales charge. IF NO ELECTION IS MADE BY A
SHAREHOLDER, ALL DIVIDENDS AND OTHER DISTRIBUTIONS WILL BE REINVESTED
AUTOMATICALLY IN ADDITIONAL ADVISOR CLASS SHARES OF THE DISTRIBUTING FUND.
Reinvestments in another G.T. Global Mutual Fund may only be directed to an
account with the identical shareholder registration and account number. These
elections may be changed by a shareholder at any time; to be effective with
respect to a distribution, the shareholder or the shareholder's broker must
contact the Transfer Agent by mail or telephone at least 15 Business Days prior
to the payment date. THE FEDERAL INCOME TAX STATUS OF DIVIDENDS AND OTHER
DISTRIBUTIONS IS THE SAME WHETHER THEY ARE RECEIVED IN CASH OR REINVESTED IN
ADDITIONAL SHARES.
Any dividend or other distribution paid by a Fund has the effect of reducing the
net asset value per share on the ex-dividend date by the amount thereof.
Therefore, a dividend or other distribution paid shortly after a purchase of
shares would represent, in substance, a return of capital to the shareholder (to
the extent it is paid on the shares so purchased), even though subject to income
tax, as discussed below.
TAXES. Each Fund intends to continue to qualify for treatment as a regulated
investment company under the Code. In each taxable year that a Fund so
qualifies, the Fund (but not its shareholders) will be relieved of federal
income tax on that part of its investment company taxable income (consisting
generally of net investment income, net gains from certain foreign currency
transactions and net short-term capital gain) and net capital gain that is
distributed to its shareholders.
Dividends from a Fund's investment company taxable income (whether paid in cash
or reinvested in additional shares) are taxable to shareholders as ordinary
income to the extent of the Fund's earnings and profits. Distributions of a
Fund's net capital gain, when designated as such, are taxable to its
shareholders as long-term capital gain regardless of how long they have held
their Fund shares and whether paid in cash or reinvested in additional Fund
shares.
Each Fund provides federal tax information to its shareholders annually,
including information about dividends and other distributions paid during the
preceding year and, under certain circumstances, the shareholders' respective
shares of any foreign taxes paid by the Fund, in which event each shareholder
would be required to include in his or her gross income his or her pro rata
share of those taxes but might be entitled to claim a credit or deduction for
them.
Each Fund must withhold 31% from dividends, capital gain distributions and
redemption proceeds payable to any individuals and certain other noncorporate
shareholders who have not furnished to the Fund a correct taxpayer
identification number or a properly completed claim for exemption on Form W-8 or
W-9. Withholding at that rate also is required from dividends and capital gain
distributions payable to such shareholders who otherwise are subject to backup
withholding. Fund accounts opened via a bank wire purchase (see "How to Invest
- -- Purchases Through the Distributor") are considered to have uncertified
taxpayer identification numbers unless a completed Form W-8 or W-9 or Account
Application is received by the Transfer Agent within seven days after the
purchase. A shareholder should contact the Transfer Agent if the shareholder is
uncertain whether a proper taxpayer identification number is on file with a
Fund.
A redemption of Fund shares may result in taxable gain or loss to the redeeming
shareholder, depending upon whether the redemption proceeds are more or less
than the shareholder's adjusted basis for the redeemed shares. An exchange of
Fund shares for shares of another G.T. Global Mutual Fund generally will have
similar tax consequences. In addition, if Fund shares are purchased within 90
days before or after redeeming other shares of the same Fund (regardless of
class) at a loss, all or a part of the loss will not be deductible and instead
will increase the basis of the newly purchased shares.
The foregoing is only a summary of some of the important federal tax
considerations generally affecting each Fund and its shareholders. See "Taxes"
in the Statement of Additional Information for a further discussion. There may
be other federal, state, local or foreign tax considerations applicable to a
particular investor. Prospective investors therefore are urged to consult their
tax advisers.
Prospectus Page 30
<PAGE>
G.T. GLOBAL EMERGING MARKETS FUND
G.T. LATIN AMERICA GROWTH FUND
MANAGEMENT
- --------------------------------------------------------------------------------
The Company's Board of Directors has overall responsibility for the operation of
the Funds. Pursuant to such responsibility, the Board has approved contracts
with various financial organizations to provide, among other things, day to day
management services required by the Funds.
INVESTMENT MANAGEMENT AND ADMINISTRATION. Services provided by G.T. Capital as
each Fund's investment manager and administrator include, but are not limited
to, determining the composition of the Fund's portfolio and placing orders to
buy, sell or hold particular securities; furnishing corporate officers and
clerical staff; providing office space, services and equipment; and supervising
all matters relating to the Fund's operation. For these services, each of the
Funds pays G.T. Capital investment management and administration fees, computed
daily and paid monthly, based on its average daily net assets, at the annualized
rate of .975% on the first $500 million, .95% on the next $500 million, .925% on
the next $500 million, and .90% on amounts thereafter. These rates are higher
than those paid by most mutual funds.
G.T. Capital, organized in 1973, provides investment management and/or
administration services to all the G.T. Global Mutual Funds as well as to other
institutional, corporate and individual clients. The offices of G.T. Capital are
located at 50 California Street, 27th Floor, San Francisco, California 94111.
G.T. Capital is the U.S. member of the G.T. Group, an international investment
advisory organization established in 1969 for the purpose of rendering
international portfolio management services to both institutional and individual
clients. Since the G.T. Group was established, it has gained a reputation as a
leader in identifying and investing in emerging and established markets around
the world. As of April 1, 1995, aggregate assets under G.T. Group management
exceeded $20 billion, of which more than $17 billion was invested in the
securities of non-U.S. issuers. Of this amount, more than $6 billion was
invested in emerging markets including the securities of Latin American issuers.
In addition to the San Francisco office, the G.T. Group maintains fully staffed
investment offices in London, Hong Kong, Tokyo, Toronto, Singapore and Sydney.
Many of G.T. Capital's investment managers are natives of the countries in which
they invest, and have the advantage of being close to the financial markets they
follow and speaking the languages of local corporate and government leaders.
G.T. Capital's experienced management team is situated to react quickly to
changes in foreign markets which are in time zones different from those in the
United States.
G.T. Capital and the other companies in the G.T. Group are subsidiaries of BIL
GT Group Limited ("BIL GT Group"), a financial services holding company. BIL GT
Group in turn is controlled by the Prince of Liechtenstein Foundation, which
serves as the parent organization for the various business enterprises of the
Princely Family of Liechtenstein. Its principal business address is Herrengasse
12, FL-9490, Vaduz, Liechtenstein.
Prospectus Page 31
<PAGE>
G.T. GLOBAL EMERGING MARKETS FUND
G.T. LATIN AMERICA GROWTH FUND
In managing the Funds, G.T. Capital employs a team approach, taking advantage of
the resources of its various investment offices around the world in seeking to
achieve the Funds' objectives. In addition, in managing the Funds these
individuals utilize the research and related work of other members of G.T.
Capital's investment staff. The investment professionals primarily responsible
for the portfolio management of the Funds are as follows:
EMERGING MARKETS FUND
<TABLE>
<CAPTION>
RESPONSIBILITIES FOR BUSINESS EXPERIENCE
NAME/OFFICE THE FUND LAST FIVE YEARS
- -------------------------------------- -------------------------------------- --------------------------------------
<S> <C> <C>
Jonathan Chew Portfolio Manager since Fund inception Portfolio Manager for G.T. Management
Hong Kong in 1992 Ltd. (Hong Kong); Portfolio Manager
for G.T. Capital since 1992
Simon Nocera Portfolio Manager since Fund inception Portfolio Manager and Economist for
San Francisco in 1992 G.T. Capital since 1992; From 1991 to
1992, Mr. Nocera was Senior Vice
President and Director for Global
Fixed Income at the Putnam Companies.
Prior thereto, he was a Financial
Economist at the International
Monetary Fund
James M. Bogin Security selection for Latin America Portfolio Manager for G.T. Capital
San Francisco since 1993 since 1993; From 1989 to 1993, Mr.
Bogin was a Fund Manager at Nomura
Investment Management Co. (Tokyo)
John R. Legat Security selection for Europe and Portfolio Manager for G.T. Capital and
London Africa since 1995 G.T. Management PLC (London)
</TABLE>
LATIN AMERICA GROWTH FUND
<TABLE>
<CAPTION>
RESPONSIBILITIES FOR BUSINESS EXPERIENCE
NAME/OFFICE THE FUND LAST FIVE YEARS
- -------------------------------------- -------------------------------------- --------------------------------------
<S> <C> <C>
Soraya M. Betterton Portfolio Manager since Fund inception Portfolio Manager for G.T. Capital
San Francisco in 1991
Andrew Boczek Assistant Portfolio Manager since 1993 Investment Analyst for G.T. Capital
San Francisco since 1993; From 1991 to 1993, Mr.
Boczek was an Analyst at Continental
Bank Corporation. Prior thereto, he
was a Research Assistant at the
International Monetary Fund
</TABLE>
Prospectus Page 32
<PAGE>
G.T. GLOBAL EMERGING MARKETS FUND
G.T. LATIN AMERICA GROWTH FUND
In placing securities orders for the Funds' portfolio transactions, G.T. Capital
seeks to obtain the best net results. G.T. Capital has no agreement or
commitment to place orders with any broker-dealer. Commissions or discounts in
foreign securities exchanges or OTC markets often are fixed and generally are
higher than those in U.S. securities exchanges or markets. Consistent with its
obligation to obtain the best net results, G.T. Capital may consider a
broker/dealer's sale of shares of the G.T. Global Mutual Funds as a factor in
considering through whom portfolio transactions will be effected. Brokerage
transactions may be executed through any of the BIL GT Group affiliates.
The Emerging Markets Fund and the Latin America Growth Fund's portfolio turnover
rates during the fiscal year ended October 31, 1994 were 100% and 155%,
respectively. However, G.T. Capital does not regard portfolio turnover as a
limiting factor and will buy or sell securities for either Fund as necessary in
response to market conditions to meet the Fund's objective. The portfolio
turnover rate is calculated by dividing the lesser of sales or purchases of
portfolio securities by the Fund's average month-end portfolio value, excluding
short-term investments. For purposes of this calculation, portfolio securities
exclude purchases and sales of debt securities having a maturity at the date of
purchase of one year or less. High portfolio turnover involves correspondingly
greater transaction costs in the form of brokerage commissions or dealer spreads
and other costs that a Fund will bear directly, and may result in the
realization of net capital gains, which are taxable when distributed to
shareholders.
DISTRIBUTION OF FUND SHARES. G.T. Global is the distributor, or principal
underwriter, of each Fund's Advisor Class shares. Like G.T. Capital, G.T. Global
is a subsidiary of BIL GT Group with offices at 50 California Street, 27th
Floor, San Francisco, California 94111.
The Latin America Growth Fund has previously suspended the offering of its
shares upon the advice of G.T. Capital that doing so was in the best interests
of the portfolio management process. As of the date of this Prospectus, the
Latin America Growth Fund has resumed sales of its shares based upon G.T.
Capital's advice that it is consistent with prudent portfolio management to do
so. However, the Latin America Growth Fund reserves the right to suspend sales
again and Emerging Markets Fund reserves the right to suspend sales in the
future based upon the foregoing portfolio considerations.
G.T. Capital or an affiliate thereof may make ongoing payments to Financial
Advisors and others that facilitate the administration and servicing of Advisor
Class shareholder accounts.
G.T. Global, at its own expense, may also provide promotional incentives to
broker/dealers that sell shares of the Funds and/or shares of the other G.T.
Global Mutual Funds. In some instances compensation or promotional incentives
may be offered to brokers/dealers that have sold or may sell significant amounts
of shares during specified periods of time. Such compensation and incentives may
include, but are not limited to, cash, merchandise, trips and financial
assistance to broker/ dealers in connection with preapproved conferences or
seminars, sales or training programs for invited sales personnel, payment for
travel expenses (including meals and lodging) incurred by sales personnel and
members of their families or other invited guests to various locations for such
seminars or training programs, seminars for the public, advertising and sales
campaigns regarding one or more of the G.T. Global Mutual Funds, and/or other
events sponsored by the broker/dealers.
The Glass-Steagall Act and other applicable laws, among other things, generally
prohibit federally chartered or supervised banks from engaging in the business
of underwriting or distributing securities. Accordingly, G.T. Global intends to
engage banks (if at all) only to perform administrative and shareholder
servicing functions. Banks and broker/ dealer affiliates of banks also may
execute dealer agreements with G.T. Global for the purpose of selling shares of
the Funds. While the matter is not free from doubt, the Board of Directors
believes that such laws should not preclude a bank from providing administration
or shareholder servicing support or preclude a bank's affiliates from acting as
a broker/dealer. However, judicial or administrative decisions or
interpretations of such laws, as well as changes in either federal or state
statutes or regulations relating to the permissible activities of banks or their
subsidiaries or affiliates, could prevent a bank and its affiliates from
continuing to perform all or part of its servicing or broker/dealer activities.
If a bank were prohibited from so acting, its shareholder clients would be
permitted to remain shareholders, and alternative means for continuing the
servicing of such shareholders would be sought. It is not expected that
shareholders would suffer any adverse financial consequences as a result of any
of these occurrences.
Prospectus Page 33
<PAGE>
G.T. GLOBAL EMERGING MARKETS FUND
G.T. LATIN AMERICA GROWTH FUND
OTHER INFORMATION
- --------------------------------------------------------------------------------
CONFIRMATIONS AND REPORTS TO SHAREHOLDERS. Each time a transaction is made that
affects a shareholder's account in a Fund, such as an additional investment,
redemption or the payment of a dividend or other distribution, the shareholder
will receive from the Transfer Agent a confirmation statement reflecting the
transaction. Confirmations for transactions effected pursuant to a Fund's
automatic dividend reinvestment program may be provided quarterly. Shortly after
the end of the Funds' fiscal year on October 31 and fiscal half-year on April 30
of each year, shareholders will receive an annual and semiannual report,
respectively. These reports list the securities held by the relevant Fund(s) and
include the Funds' financial statements. In addition, the federal income tax
status of distributions made by the relevant Fund(s) to shareholders will be
reported after the end of the fiscal year on Form 1099-DIV.
ORGANIZATION. The Company was organized as a Maryland corporation on October 29,
1987. Until April 28, 1989, the name of the Company was G.T. Global Income
Series, Inc. From time to time, the Company may establish other funds, each
corresponding to a distinct investment portfolio and a distinct series of the
Company's common stock. Shares of the Emerging Markets Fund and the Latin
America Growth Fund are entitled to one vote per share (with proportional voting
for fractional shares) and are freely transferable. Shareholders have no
preemptive or conversion rights.
On any matter submitted to a vote of shareholders, shares of each Fund will be
voted by that Fund's shareholders individually when the matter affects the
specific interest of that Fund only, such as approval of that Fund's investment
management arrangements. In addition, each class of shares of a Fund has
exclusive voting rights with respect to its distribution plan. The shares of all
the Company's Funds will be voted in the aggregate on other matters, such as the
election of Directors and ratification of the Board of Directors' selection of
the Company's independent accountants.
The Company normally will not hold annual meetings of shareholders, except as
required under the 1940 Act. The Company would be required to hold a
shareholders meeting in the event that at any time less than a majority of the
Directors holding office had been elected by shareholders. Directors shall
continue to hold office until their successors are elected and have qualified.
Shares of the Company's Funds do not have cumulative voting rights, which means
that the holders of a majority of the shares voting for the election of
Directors can elect all the Directors. A Director may be removed upon a majority
vote of the shareholders qualified to vote in the election. Shareholders holding
10% of the Company's outstanding voting securities may call a meeting of
shareholders for the purpose of voting upon the question of removal of any
Director or for any other purpose. The 1940 Act requires the Company to assist
shareholders in calling such a meeting.
Advisor Class shares are offered through this Prospectus to certain enumerated
investors. There are two other classes of shares offered to investors through a
separate prospectus: Class A shares and Class B shares.
CLASS A.
Class A shares are sold at net asset value plus an initial sales charge of up to
4.75% of the public offering price imposed at the time of purchase. This initial
sales charge is reduced or waived for certain purchases. Class A shares of each
Fund also bear annual service and distribution fees of up to 0.50% of the
average daily net assets of that class. For the fiscal year ended October 31,
1994, total operating expenses for the Class A shares were 2.06% for the
Emerging Markets Fund and 2.04% for the Latin America Growth Fund, respectively,
of average net assets.
CLASS B.
Class B shares are sold at net asset value with no initial sales charge at the
time of purchase. Class B shares bear annual service and distribution fees of up
to 1.00% of the average daily net assets of that class, and investors pay a
contingent deferred sales charge of up to 5% of the lesser of the original
purchase price or the net asset value of such shares at the time of redemption.
This deferred sales charge is waived for certain redemptions and is reduced for
shares held more than one year. For the fiscal year ended October 31, 1994,
total operating expenses for the Class B shares were 2.56% for
Prospectus Page 34
<PAGE>
G.T. GLOBAL EMERGING MARKETS FUND
G.T. LATIN AMERICA GROWTH FUND
the Emerging Markets Fund and 2.54% for the Latin America Growth Fund,
respectively, of average net assets.
The different expenses borne by each class of shares will result in different
net asset values and dividends. The per share net asset value of the Advisor
Class shares of a Fund generally will be higher than that of the Class A and B
shares of that Fund because of the higher expenses borne by the Class A and B
shares. The per share dividends on Advisor Class shares of a Fund will generally
be higher than the per share dividends on Class A and B shares of that Fund as a
result of the service and distribution fees applicable with respect to Class A
and B shares. Consequently, during comparable periods, the Funds expect that the
total return on an investment in shares of the Advisor Class will be higher than
the total return on Class A or B shares.
Pursuant to the Company's Articles of Incorporation, it may issue six billion
shares. Of this number, three hundred million shares have been classified as
shares of each Fund. One hundred million shares have been classified as Class A
shares of each Fund, one hundred million shares have been classified as Class B
shares of each Fund, and one hundred million shares have been classified as
Advisor Class shares of each Fund. This amount may be increased from time to
time in the discretion of the Board of Directors. Each share of the Fund
represents an interest in that Fund only, has a par value of $0.0001 per share,
represents an equal proportionate interest in the Fund with other shares of the
Fund and is entitled to such dividends and other distributions out of the income
earned and gain realized on the assets belonging to the Fund as may be declared
at the discretion of the Board of Directors. Each Class A, Class B and Advisor
Class share of the Fund is equal as to earnings, assets and voting privileges,
except as noted above, and each class bears the expenses, if any, related to the
distribution of its shares. Shares of the Fund when issued are fully paid and
nonassessable.
Emerging Markets Fund is classified as a "diversified" fund under the 1940 Act
which means that, with respect to 75% of the Fund's total assets, no more than
5% will be invested in the securities of any one issuer, and the Fund will
purchase no more than 10% of the outstanding voting securities of any one
issuer.
The Latin America Growth Fund is classified as a "non-diversified" fund under
the 1940 Act which means that with respect to 50% of its total assets, no more
than 50% will be invested in the securities of any one issuer, and the Fund will
purchase no more than 10% of the outstanding voting securities of any one
issuer.
Because the Funds employ a Combined Prospectus, it is possible that a Fund might
become liable for a misstatement with respect to the other Fund in this Combined
Prospectus. The Board of Directors of the Company have considered this in
approving the use of a Combined Prospectus.
SHAREHOLDER INQUIRIES. Shareholder inquiries may be made by calling the Funds
toll free at (800) 223-2138 or by writing to the Funds at P.O. Box #7893, San
Francisco, California 94120-7893.
PERFORMANCE INFORMATION. Each Fund, from time to time, may include information
on its investment results and/or comparisons of its investment results to
various unmanaged indices or results of other mutual funds or groups of mutual
funds in advertisements, sales literature or reports furnished to present or
prospective shareholders.
In such materials, a Fund may quote its average annual total return
("Standardized Return"). Standardized Return is calculated separately for each
class of shares of each Fund. Standardized Return shows percentage rates
reflecting the average annual change in the value of an assumed investment in
the Fund at the end of a one-year period and at the end of five- and ten-year
periods, reduced by the maximum applicable sales charge imposed on sales of Fund
shares. If a one-, five- and/or ten-year period has not yet elapsed, data will
be provided as of the end of a shorter period corresponding to the life of the
Fund. Standardized Return assumes the reinvestment of all dividends and other
distributions at net asset value on the reinvestment date established by the
Board of Directors.
In addition, in order to more completely represent a Fund's performance or more
accurately compare such performance to other measures of investment return, a
Fund also may include in advertisements, sales literature and shareholder
reports other total return performance data ("Non-Standardized Return").
Non-Standardized Return reflects percentage rates of return encompassing all
elements of return (i.e., income and capital appreciation or depreciation); it
assumes reinvestment of all dividends and other distributions. Non-Standardized
Return may be quoted for the
Prospectus Page 35
<PAGE>
G.T. GLOBAL EMERGING MARKETS FUND
G.T. LATIN AMERICA GROWTH FUND
same or different periods as those for which Standardized Return is quoted; it
may consist of an aggregate or average annual percentage rate of return, actual
year-by-year rates or any combination thereof. Non-Standardized Return may or
may not take sales charges into account; performance data calculated without
taking the effect of sales charges into account will be higher than data
including the effect of such charges.
Each Fund's performance data reflects past performance and is not necessarily
indicative of future results. A Fund's investment results will vary from time to
time depending upon market conditions, the composition of its portfolio and its
operating expenses. These factors and possible differences in calculation
methods should be considered when comparing a Fund's investment results with
those published for other investment companies, other investment vehicles and
unmanaged indices. A Fund's results also should be considered relative to the
risks associated with its investment objective and policies. Each Fund will
include performance data for all classes of shares of the Fund in any
advertisement or information including performance data for such Fund. See
"Investment Results" in the Statement of Additional Information.
Each Fund's annual report contains additional information with respect to its
performance. The annual report is available to investors upon request and free
of charge.
TRANSFER AGENT. Shareholder servicing, reporting and general transfer agent
functions for the Funds are performed by G.T. Global Investor Services, Inc. The
Transfer Agent is an affiliate of G.T. Capital and G.T. Global and a subsidiary
of BIL GT Group, and maintains its offices at 50 California Street, 27th Floor,
San Francisco, California 94111.
CUSTODIAN AND ACCOUNTING AGENT. State Street Bank and Trust Company, 225
Franklin Street, Boston, Massachusetts 02110 is custodian of each Fund's assets
and serves as each Fund's accounting agent.
COUNSEL. The law firm of Kirkpatrick & Lockhart LLP 1800 M Street, N.W.,
Washington, D.C. 20036-5891, acts as counsel to the Company and the Funds.
Kirkpatrick & Lockhart LLP also acts as counsel to G.T. Capital, G.T. Global and
G.T. Global Investor Services, Inc. in connection with other matters.
INDEPENDENT ACCOUNTANTS. The Company's and each Fund's independent accountants
are Coopers & Lybrand L.L.P., One Post Office Square, Boston, Massachusetts
02109. Coopers & Lybrand L.L.P., will conduct an annual audit of each Fund,
assist in the preparation of each Fund's federal and state income tax returns
and consult with the Company, or Trust, as applicable, and each Fund as to
matters of accounting, regulatory filings, and federal and state income
taxation.
MULTIPLE TRANSLATIONS OF THE PROSPECTUS. This Prospectus may be translated into
other languages. In the event of any inconsistency or ambiguity as to the
meaning of any word or phrase contained in a translation, the English text shall
prevail.
Prospectus Page 36
<PAGE>
<TABLE>
<S> <C> <C>
[G.T. GLOBAL LOGO]
G.T. GLOBAL
MUTUAL FUNDS
P.O. Box 7345 ADVISOR CLASS
SAN FRANCISCO, CA 94120-7345 ACCOUNT APPLICATION
800/223-2138
</TABLE>
<TABLE>
<S> <C> <C>
/ / INDIVIDUAL / / JOINT TENANT / / GIFT/TRANSFER FOR MINOR / / TRUST / / CORP.
ACCOUNT REGISTRATION / / NEW ACCOUNT / / ACCOUNT REVISION (Account No.: -------------------------------------)
NOTE: Trust registrations should specify name of trustee(s), beneficiary(ies) and date of trust instrument. Registration for
Uniform Gifts/Transfers to Minors accounts should be in the name of one custodian and one minor and include the state under
which the custodianship is created.
----------------------------------------------------------------
- ------------------------------------------------------------ Social Security Number / / or Tax I.D. Number / / (Check
Owner applicable box)
- ------------------------------------------------------------ If more than one owner, social security number or taxpayer
Co-owner 1 identification number should be provided for first owner listed.
- ------------------------------------------------------------ If a purchase is made under Uniform Gift/Transfer to Minors Act,
Co-owner 2 social security number of the minor must be provided.
Resident of / / U.S. / / Other (specify) ----------------
- -------------------------------------------------------------------------------------- ( )
Street Address ---------------------------
- -------------------------------------------------------------------------------------- Home Telephone
City, State, Zip Code ( )
---------------------------
Business Telephone
FUND SELECTION $25,000 total minimum initial investment is required. Checks should be made payable to "G.T. GLOBAL."
</TABLE>
<TABLE>
<S> <C> <C> <C>
INITIAL INITIAL
INVESTMENT INVESTMENT
407 / / G.T. GLOBAL WORLDWIDE GROWTH FUND $ 402 / / G.T. GLOBAL NEW PACIFIC GROWTH FUND $
---------- ----------
405 / / G.T. GLOBAL INTERNATIONAL GROWTH FUND $ 403 / / G.T. GLOBAL EUROPE GROWTH FUND $
---------- ----------
416 / / G.T. GLOBAL EMERGING MARKETS FUND $ 413 / / G.T. LATIN AMERICA GROWTH FUND $
---------- ----------
411 / / G.T. GLOBAL HEALTH CARE FUND $ 406 / / G.T. GLOBAL AMERICA GROWTH FUND $
---------- ----------
415 / / G.T. GLOBAL TELECOMMUNICATIONS FUND $ 404 / / G.T. GLOBAL JAPAN GROWTH FUND $
---------- ----------
419 / / G.T. GLOBAL INFRASTRUCTURE FUND $ 410 / / G.T. GLOBAL GROWTH & INCOME FUND $
---------- ----------
417 / / G.T. GLOBAL FINANCIAL SERVICES FUND $ 409 / / G.T. GLOBAL GOVERNMENT INCOME FUND $
---------- ----------
421 / / G.T. GLOBAL NATURAL RESOURCES FUND $ 408 / / G.T. GLOBAL STRATEGIC INCOME FUND $
---------- ----------
422 / / G.T. GLOBAL CONSUMER PRODUCTS $ 418 / / G.T. GLOBAL HIGH INCOME FUND $
AND SERVICES FUND ---------- ----------
401 / / G.T. GLOBAL DOLLAR FUND $
----------
TOTAL INITIAL INVESTMENT: $
----------
</TABLE>
AGREEMENTS & SIGNATURES
By the execution of this Account Application, I/we represent and warrant that
I/we have full right, power and authority and am/are of legal age in my/our
state of residence to make the investment applied for pursuant to this
Application. The person(s), if any, signing on behalf of the investor
represent and warrant that they are duly authorized to sign this Application
and to purchase, redeem or exchange shares of the Fund(s) on behalf of the
investor. I/WE HEREBY AFFIRM THAT I/WE HAVE RECEIVED A CURRENT ADVISOR CLASS
PROSPECTUS OF THE G.T. FUND(S) IN WHICH I/WE AM/ARE INVESTING AND I/WE AGREE
TO ITS TERMS AND CONDITIONS.
I/WE AND MY/OUR AGENTS, ASSIGNS AND SUCCESSORS UNDERSTAND AND AGREE THAT THE
ACCOUNT WILL BE SUBJECT TO THE TELEPHONE EXCHANGE AND TELEPHONE REDEMPTION
PRIVILEGES DESCRIBED IN THE CURRENT PROSPECTUS TO WHICH THIS APPLICATION IS
ATTACHED AND AGREE THAT G.T. GLOBAL FINANCIAL SERVICES, INC., G.T. GLOBAL
GROWTH SERIES, G.T. INVESTMENT FUNDS, INC., G.T. INVESTMENT PORTFOLIOS, INC.
AND THE FUNDS' TRANSFER AGENT, THEIR OFFICERS AND EMPLOYEES, WILL NOT BE
LIABLE FOR ANY LOSS OR DAMAGES ARISING OUT OF ANY SUCH TELEPHONE, TELEX OR
TELEGRAPHIC INSTRUCTIONS REASONABLY BELIEVED TO BE GENUINE, INCLUDING ANY SUCH
LOSS OR DAMAGES DUE TO NEGLIGENCE ON THE PART OF SUCH ENTITIES. THE
INVESTOR(S) CERTIFY(IES) AND AGREE(S) THAT THE CERTIFICATIONS, AUTHORIZATIONS,
DIRECTIONS AND RESTRICTIONS CONTAINED HEREIN WILL CONTINUE UNTIL G.T. GLOBAL
FINANCIAL SERVICES, INC., G.T. GLOBAL GROWTH SERIES, G.T. INVESTMENT FUNDS,
INC., G.T. INVESTMENT PORTFOLIOS, INC. OR THE FUNDS' TRANSFER AGENT RECEIVES
WRITTEN NOTICE OF ANY CHANGE OR REVOCATION. ANY CHANGE IN THESE INSTRUCTIONS
MUST BE IN WRITING AND IN SOME CASES, AS DESCRIBED IN THE PROSPECTUS, REQUIRES
THAT ALL SIGNATURES BE GUARANTEED.
PLEASE INDICATE THE NUMBER OF SIGNATURES REQUIRED TO PROCESS CHECKS OR
WRITTEN REDEMPTION REQUESTS: / / ONE / / TWO / / THREE / / FOUR.
(If you do not indicate the number of required signatures, ALL account
owners must sign checks and/or written redemption requests.)
Under penalties of perjury, I certify that the Taxpayer Identification
Number provided on this form is my (or my employer's, trust's, minor's or
other payee's) true, correct and complete Number and may be assigned to any
new account opened under the exchange privilege. I further certify that I am
(or the payee whose Number is given is) not subject to backup withholding
because: (a) I am (or the payee is) exempt from backup withholding; (b) the
Internal Revenue Service has not notified me that I am (or the payee is)
subject to backup withholding as a result of a failure to report all interest
or dividends; OR (c) the I.R.S. has notified me that I am (the payee is) no
longer subject to backup withholding;
OR, / / I am (the payee is) subject to backup withholding.
ALL ACCOUNT OWNERS MUST SIGN BELOW (Minors are not authorized signers)
Account revisions may require that signatures be guaranteed. Please see the
Prospectus.
<TABLE>
<S> <C>
----------------------------------------------------------
Date
X X
---------------------------------------------------------- ----------------------------------------------------------
X X
---------------------------------------------------------- ----------------------------------------------------------
</TABLE>
<PAGE>
ACCOUNT PRIVILEGES
CHECKWRITING PRIVILEGE
Checkwriting privilege available on Advisor Class shares of G.T. Global Dollar
Fund and G.T. Global Government Income Fund.
/ / Check here if desired. You will be sent a book of checks.
CAPITAL GAINS AND DIVIDEND DISTRIBUTIONS
All capital gains and dividend distributions will be reinvested in additional
shares of Advisor class unless appropriate boxes below are checked:
/ / Pay capital gain distributions only in cash / / Pay dividends only in
cash / / Pay capital gain distributions AND dividends in cash.
SPECIAL CAPITAL GAINS AND DIVIDEND DISTRIBUTIONS OPTION
Pay distributions noted above to another G.T. Global Fund: Fund Name
- -----------------------------------------
<TABLE>
<S> <C>
TELEPHONE EXCHANGE AND REDEMPTION AUTHORITY TO TRANSMIT REDEMPTION PROCEEDS TO
PRE-DESIGNATED ACCOUNT
I/We, either directly or through the Authorized Agent, if any, named By completing the following section, redemptions that
below, hereby authorize the Transfer Agent of the G.T. Global Mutual exceed $1,000 may be wired or mailed to a Pre-Designated
Funds, to honor any telephone, telex or telegraphic instructions Account at your bank. (Wiring instructions may be obtained
reasonably believed to be authentic for redemption and/or exchange from your bank.) A bank wire service fee may be charged.
between a similar class of shares of any of the Funds distributed by ----------------------------------------------------------
G.T. Global Financial Services, Inc. Name of Bank
----------------------------------------------------------
Bank Address
----------------------------------------------------------
Bank A.B.A Number Account Number
----------------------------------------------------------
Names(s) in which Bank Account is Established
A corporation (or partnership) must also submit a
"Corporate Resolution" (or "Certificate of Partnership")
indicating the names and titles of Officers authorized to
act on its behalf.
</TABLE>
<TABLE>
<S> <C> <C> <C>
FOR USE BY AUTHORIZED AGENT ONLY
We hereby submit this Account Application for the purchase of Advisor Class shares in accordance with the terms of our Advisor Class
Agreement with G.T. Global Financial Services, Inc. and with the Prospectus and Statement of Additional Information of each Fund
purchased.
- ------------------------------------------------------------------------------------------------------------------------------------
Advisor's Name
- ------------------------------------------------------------------------------------------------------------------------------------
Main Office Address Branch Number (if applicable) Representative's Number Representative's
Name
( )
- -------------------------------------------------------------------------------------------------------------------------
Branch Address Telephone
- -------------------------------------------------------------------------------------------------------------------------
Advisor's Authorized Signature Title
</TABLE>
<PAGE>
NOTES
- --------------------------------------------------------------------------------
Prospectus Page 37
<PAGE>
G.T. GLOBAL EMERGING MARKETS FUND
G.T. LATIN AMERICA GROWTH FUND
[LOGO]
G.T. GLOBAL GROUP OF FUNDS
G.T. GLOBAL OFFERS A BROAD RANGE OF MUTUAL FUNDS TO COMPLEMENT MANY
INVESTORS' PORTFOLIOS. FOR MORE INFORMATION AND A PROSPECTUS ON ANY OF THE
G.T. GLOBAL FUNDS, PLEASE CONTACT YOUR FINANCIAL ADVISOR OR CALL G.T. GLOBAL
DIRECTLY AT 1-800-824-1580.
GROWTH FUNDS
/ / GLOBALLY DIVERSIFIED FUNDS
G.T. GLOBAL WORLDWIDE GROWTH FUND
Invests around the world, including the U.S.
G.T. GLOBAL INTERNATIONAL GROWTH FUND
Provides portfolio diversity by investing outside
the U.S.
G.T. GLOBAL EMERGING MARKETS FUND
Gives access to the growth potential of developing economies
/ / GLOBAL THEME FUNDS
G.T. GLOBAL HEALTH CARE FUND
Invests in growing health care industries worldwide
G.T. GLOBAL TELECOMMUNICATIONS FUND
Invests in companies worldwide that develop, manufacture or sell
telecommunications services or equipment
G.T. GLOBAL INFRASTRUCTURE FUND
Seeks companies that build, improve or maintain a country's infrastructure
G.T. GLOBAL FINANCIAL SERVICES FUND
Focuses on the worldwide opportunities from the demand for financial services
and products
G.T. GLOBAL NATURAL RESOURCES FUND
Concentrates on companies that own, explore or develop natural resources
G.T. GLOBAL CONSUMER PRODUCTS AND
SERVICES FUND
Invests in companies that manufacture, market, retail or distribute consumer
products or services
/ / REGIONALLY DIVERSIFIED FUNDS
G.T. GLOBAL NEW PACIFIC GROWTH FUND
Offers access to the emerging and established markets of the Pacific Rim,
excluding Japan
G.T. GLOBAL EUROPE GROWTH FUND
Focuses on investment opportunities in the new, unified Europe
G.T. LATIN AMERICA GROWTH FUND
Invests in the emerging markets of Latin America
/ / SINGLE COUNTRY FUNDS
G.T. GLOBAL AMERICA GROWTH FUND
Concentrates on small and medium-sized companies in the U.S.
G.T. GLOBAL JAPAN GROWTH FUND
Provides U.S. investors with direct access to the Japanese market
GROWTH AND INCOME FUND
G.T. GLOBAL GROWTH & INCOME FUND
Invests in blue-chip stocks and government bonds from around the world
INCOME FUNDS
G.T. GLOBAL GOVERNMENT INCOME FUND
Earns monthly income from global government securities
G.T. GLOBAL STRATEGIC INCOME FUND
Allocates its assets among debt securities from the U.S., developed foreign
countries and emerging markets
G.T. GLOBAL HIGH INCOME FUND
Invests in debt securities in emerging markets
MONEY MARKET FUND
G.T. GLOBAL DOLLAR FUND
Invests in high quality, U.S. dollar-denominated money market securities
worldwide for stability and preservation of capital
NO DEALER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS
AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED
UPON AS HAVING BEEN AUTHORIZED BY G.T. GLOBAL GROWTH SERIES, G.T. INVESTMENT
FUNDS, INC., G.T. GLOBAL EMERGING MARKETS FUND, G.T. LATIN AMERICA GROWTH
FUND, G.T. CAPITAL MANAGEMENT, INC. OR G.T. GLOBAL FINANCIAL SERVICES, INC.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR SOLICITATION OF ANY
OFFER TO BUY ANY OF THE SECURITIES OFFERED HEREBY IN ANY JURISDICTION TO ANY
PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER IN SUCH JURISDICTION.
EQUPV506040MC
<PAGE>
[LOGO]
G.T. LATIN AMERICA GROWTH FUND:
ADVISOR CLASS
50 California Street, 27th Floor
San Francisco, California 94111
(415) 392-6181
Toll Free: (800) 824-1580
Statement of Additional Information
March 1, 1995
- --------------------------------------------------------------------------------
G.T. Latin America Growth Fund ("Fund") is a non-diversified mutual fund
organized as a separate series of G.T. Investment Funds, Inc. ("Company"), a
registered open-end management investment company. This Statement of Additional
Information relating to the Advisor Class of the Fund is not a prospectus and
supplements and should be read in conjunction with the Fund's current Advisor
Class Prospectus dated March 1, 1995. A copy of the Fund's Prospectus is
available without charge by either writing the Fund at the above address or by
calling the Fund at the toll free telephone number printed above.
G.T. Capital Management, Inc. ("G.T. Capital") serves as the Fund's investment
manager and administrator. The distributor of the Fund's shares is G.T. Global
Financial Services, Inc. ("G.T. Global"). The Fund's transfer agent is G.T.
Global Investor Services, Inc. ("G.T. Services" or "Transfer Agent").
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Page No.
--------
<S> <C>
Investment Objective and Policies........................................................................................ 2
Options, Futures and Currency Strategies................................................................................. 4
Risk Factors............................................................................................................. 13
Investment Limitations................................................................................................... 18
Execution of Portfolio Transactions...................................................................................... 20
Directors and Executive Officers......................................................................................... 22
Management............................................................................................................... 24
Valuation of Shares...................................................................................................... 25
Information Relating to Sales and Redemptions............................................................................ 26
Taxes.................................................................................................................... 28
Additional Information................................................................................................... 31
Investment Results....................................................................................................... 31
Appendix................................................................................................................. 47
Description of Debt Ratings.............................................................................................. 48
Financial Statements..................................................................................................... 50
</TABLE>
Statement of Additional Information Page 1
<PAGE>
G.T. LATIN AMERICA GROWTH FUND
INVESTMENT OBJECTIVE
AND POLICIES
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVE
The investment objective of the Fund is capital appreciation. The Fund will
normally invest at least 65% of its total assets in securities of a broad range
of Latin American issuers. Under current market conditions, the Fund expects to
invest primarily in equity and debt securities issued by companies and
governments in Mexico, Chile, Brazil and Argentina. Though the Fund can normally
invest up to 35% of its total assets in U.S. securities, the Fund reserves the
right to be primarily invested in U.S. securities for temporary defensive
purposes or pending investment of the proceeds of the offering made hereby.
SELECTION OF EQUITY INVESTMENTS
G.T. Capital is the investment manager of the Fund. In determining the
appropriate distribution of investments among various countries for the Fund,
G.T. Capital ordinarily considers the following factors: prospects for relative
economic growth between the different countries in which the Fund may invest;
expected levels of inflation; government policies influencing business
conditions; the outlook for interest rates; the outlook for currency
relationships; and the range of the individual investment opportunities
available to international investors.
In analyzing companies for investment by the Fund, G.T. Capital ordinarily looks
for one or more of the following characteristics: an above-average earnings
growth per share; high return on invested capital; healthy balance sheet; sound
financial and accounting policies and overall financial strength; strong
competitive advantages; effective research and product development and
marketing; efficient service; pricing flexibility; strength of management; and
general operating characteristics which will enable the companies to compete
successfully in their respective marketplaces. In certain countries,
governmental restrictions and other limitations on investment may affect the
maximum percentage of equity ownership in any one company by the Fund. In
addition, in some instances only special classes of securities may be purchased
by foreigners and the market prices, liquidity and rights with respect to those
securities may vary from shares owned by nationals.
There may be times when, in the opinion of G.T. Capital, prevailing market,
economic or political conditions warrant reducing the proportion of the Fund's
assets invested in equity securities and increasing the proportion held in cash
or short-term obligations denominated in U.S. dollars or other currencies. A
portion of the Fund's assets normally will be held in U.S. dollars or short-term
interest-bearing dollar-denominated securities to provide for ongoing expenses
and redemptions.
It should be noted that some Latin American countries require governmental
approval for the repatriation of investment income, capital, or the proceeds of
securities sales by foreign investors. For instance, at present, capital
invested directly in Chile cannot under most circumstances be repatriated for at
least one year. The Fund could be adversely affected by delays in, or a refusal
to grant, any required governmental approval for repatriation, as well as by the
application to it of other restrictions on investments.
The Fund may be prohibited under the Investment Company Act of 1940 ("1940 Act")
from purchasing the securities of any foreign company that, in its most recent
fiscal year, derived more than 15% of its gross revenues from securities-related
activities ("securities-related companies"). In a number of Latin American
countries, commercial banks act as securities broker/dealers, investment
advisers and underwriters or otherwise engage in securities-related activities,
which may limit the Fund's ability to hold securities issued by banks. The
Securities and Exchange Commission ("SEC") has proposed a rule which, if
adopted, may permit the Fund to invest in certain of these securities subject to
certain restrictions. The Fund has obtained an exemption from the SEC to permit
the Fund to invest in a manner that is consistent with the SEC's proposed rule.
The proposed rule excepts from the prohibition of the 1940 Act any acquisition
by an investment company of securities of securities-related companies provided
that certain percentage limitations are adhered to.
DEBT CONVERSIONS
Several Latin American countries have adopted debt conversion programs, pursuant
to which investors may use external debt of a country, directly or indirectly,
to make investments in local companies. The terms of the various programs vary
from country to country, although each program includes significant restrictions
on the application of the proceeds
Statement of Additional Information Page 2
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G.T. LATIN AMERICA GROWTH FUND
received in the conversion and on the remittance of profits on the investment
and of the invested capital. The Fund intends to acquire Sovereign Debt, as
defined in the Prospectus, to hold and trade in appropriate circumstances as
described in the Prospectus, as well as to use to participate in Latin American
debt conversion programs. G.T. Capital will evaluate opportunities to enter into
debt conversion transactions as they arise but does not currently intend to
invest more than 5% of the Fund's assets in such programs.
DEPOSITORY RECEIPTS
The Fund may hold securities of foreign issuers in the form of American
Depository Receipts ("ADRs"), American Depository Shares ("ADSs") and European
Depository Receipts ("EDRs") or other securities convertible into securities of
eligible issuers. These securities may not necessarily be denominated in the
same currency as the securities for which they may be exchanged. ADRs and ADSs
are typically issued by an American bank or trust company which evidence
ownership of underlying securities issued by a foreign corporation. EDRs, which
are sometimes referred to as Continental Depository Receipts ("CDRs"), are
receipts issued in Europe typically by foreign banks and trust companies that
evidence ownership of either foreign or domestic securities. Generally, ADRs and
ADSs in registered form are designed for use in United States securities markets
and EDRs and CDRs in bearer form are designed for use in European securities
markets. For purposes of the Fund's investment policies, the Fund's investments
in ADRs, ADSs, EDRs, and CDRs will be deemed to be investments in the equity
securities representing securities of foreign issuers into which they may be
converted.
WARRANTS OR RIGHTS
Warrants or rights may be acquired by the Fund in connection with other
securities or separately and provide the Fund with the right to purchase at a
later date other securities of the issuer. As a condition of its continuing
registration in a state, the Fund has undertaken that its investments in
warrants or rights, valued at the lower of cost or market, will not exceed 5% of
the value of its net assets and not more than 2% of such assets will be invested
in warrants and rights which are not listed on the American or New York Stock
Exchange. Warrants or rights acquired by the Fund in units or attached to
securities will be deemed to be without value for purpose of this restriction.
These limits are not fundamental policies of the Fund and may be changed by vote
of a majority of the Company's Board of Directors without shareholder approval.
LENDING OF PORTFOLIO SECURITIES
For the purpose of realizing additional income, the Fund may make secured loans
of portfolio securities amounting to not more than 25% of its total assets.
Securities loans are made to broker/dealers or institutional investors pursuant
to agreements requiring that the loans be continuously secured by collateral at
least equal at all times to the value of the securities lent plus any accrued
interest, "marked to market" on a daily basis. The collateral received will
consist of cash, U.S. short-term government securities, bank letters of credit
or such other collateral as may be permitted under the Fund's investment program
and by regulatory agencies and approved by the Company's Board of Directors.
While the securities loan is outstanding, the Fund will continue to receive the
equivalent of the interest or dividends paid by the issuer on the securities, as
well as interest on the investment of the collateral or a fee from the borrower.
The Fund will have a right to call each loan and obtain the securities on five
business days' notice. The Fund will not have the right to vote equity
securities while they are lent, but it may call in a loan in anticipation of any
important vote.
COMMERCIAL BANK OBLIGATIONS
For the purposes of the Fund's investment policies with respect to bank
obligations, obligations of foreign branches of U.S. banks and of foreign banks
are obligations of the issuing bank and may be general obligations of the parent
bank. Such obligations may, however, be limited by the terms of a specific
obligation and by government regulation. As with investment in non-U.S.
securities in general, investments in the obligations of foreign branches of
U.S. banks and of foreign banks may subject the Fund to investment risks that
are different in some respects from those of investments in obligations of
domestic issuers. Although the Fund will typically acquire obligations issued
and supported by the credit of U.S. or foreign banks having total assets at the
time of purchase in excess of $1 billion, this $1 billion figure is not a
fundamental investment policy or restriction of the Fund. For the purposes of
calculation with respect to the $1 billion figure, the assets of a bank will be
deemed to include the assets of its U.S. and non-U.S. branches.
REPURCHASE AGREEMENTS
The Fund will invest only in repurchase agreements collateralized at all times
in an amount at least equal to the repurchase price plus accrued interest. To
the extent that the proceeds from any sale of such collateral upon a default in
the obligation to repurchase were less than the repurchase price, the Fund would
suffer a loss. If the financial institution which is party to the repurchase
agreement petitions for bankruptcy or otherwise becomes subject to bankruptcy or
other liquidation proceedings, there may be restrictions on the Fund's ability
to sell the collateral and the Fund could suffer a loss. However, with respect
to financial institutions whose bankruptcy or liquidation proceedings are
subject to the U.S. Bankruptcy Code, the Fund intends to comply with provisions
under the U.S. Bankruptcy Code that would allow it immediately to
Statement of Additional Information Page 3
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G.T. LATIN AMERICA GROWTH FUND
resell the collateral. There is no limitation on the amount of the Fund's assets
that may be subject to repurchase agreements at any given time. The Fund will
not enter into a repurchase agreement with a maturity of more than seven days
if, as a result, more than 10% of the value of its total assets would be
invested in such repurchase agreements and other illiquid investments.
REVERSE REPURCHASE AGREEMENTS
The Fund may enter into reverse repurchase agreements, which involve the sale of
a security by the Fund and its agreement to repurchase the security at a
specified time and price. However, the Fund does not currently intend to engage
in reverse repurchase agreements with respect to more than 5% of its total
assets. The Fund will maintain, in a segregated amount with a custodian, cash,
U.S. government securities or other liquid, high grade debt securities in an
amount sufficient to cover its obligations under reverse repurchase agreements
with broker/dealers. No segregation is required for reverse repurchase
agreements with banks.
SHORT SALES
The Fund is authorized to make short sales of securities, although it has no
current intention of doing so. A short sale is a transaction in which the Fund
sells a security in anticipation that the market price of that security will
decline. The Fund may make short sales (i) as a form of hedging to offset
potential declines in long positions in securities it owns, or anticipates
acquiring, and (ii) in order to maintain portfolio flexibility.
When the Fund makes a short sale of a security it does not own, it must borrow
the security sold short and deliver it to the broker-dealer or other
intermediary through which it made the short sale. The Fund may have to pay a
fee to borrow particular securities and will often be obligated to pay over any
payments received on such borrowed securities.
The Fund's obligation to replace the borrowed security when the borrowing is
called or expires will be secured by collateral (usually cash, government
securities or other highly liquid securities similar to those borrowed)
deposited with the intermediary. The Fund will also be required to deposit
similar collateral with its custodian to the extent, if any, necessary so that
the value of both collateral deposits in the aggregate is at all times equal to
at least the current market value of the security sold short. Depending on
arrangements made with the intermediary from which it borrowed the security
regarding payment of any amounts received by the Fund on such security, the Fund
may not receive any payments (including interest) on its collateral deposited
with such intermediary.
If the price of the security sold short increases between the time of the short
sale and the time the Fund replaces the borrowed security, the Fund will incur a
loss; conversely, if the price declines, the Fund will realize a gain. Any gain
will be decreased, and any loss increased, by the transaction costs associated
with the transaction. Although the Fund's gain is limited by the price at which
it sold the security short, its potential loss is theoretically unlimited.
The Fund will not make a short sale if, after giving effect to such sale, the
market value of the securities sold short exceeds 25% of the value of its total
assets or the Fund's aggregate short sales of the securities of any one issuer
exceed the lesser of 2% of the Fund's net assets or 2% of the securities of any
class of the issuer. Moreover, the Fund may engage in short sales only with
respect to securities listed on a national securities exchange. The Fund may
make short sales "against the box" without respect to such limitations. In this
type of short sale, at the time of the sale the Fund owns the security it has
sold short or has the immediate and unconditional right to acquire at no
additional cost the identical security.
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OPTIONS, FUTURES AND CURRENCY
STRATEGIES
- --------------------------------------------------------------------------------
SPECIAL RISKS OF OPTIONS, FUTURES AND CURRENCY STRATEGIES
The use of options, futures contracts and forward currency contracts ("Forward
Contracts") involves special considerations and risks, as described below. Risks
pertaining to particular instruments are described in the sections that follow.
(1) Successful use of most of these instruments depends upon G.T.
Capital's ability to predict movements of the overall securities and
currency markets, which requires different skills than predicting changes in
the prices of individual securities. While G.T. Capital is experienced in
the use of these instruments, there can be no assurance that any particular
strategy adopted will succeed.
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G.T. LATIN AMERICA GROWTH FUND
(2) There might be imperfect correlation, or even no correlation,
between price movements of an instrument and price movements of the
investments being hedged. For example, if the value of an instrument used in
a short hedge increased by less than the decline in value of the hedged
investment, the hedge would not be fully successful. Such a lack of
correlation might occur due to factors unrelated to the value of the
investments being hedged, such as speculative or other pressures on the
markets in which the hedging instrument is traded. The effectiveness of
hedges using hedging instruments on indices will depend on the degree of
correlation between price movements in the index and price movements in the
investments being hedged.
(3) Hedging strategies, if successful, can reduce risk of loss by wholly
or partially offsetting the negative effect of unfavorable price movements
in the investments being hedged. However, hedging strategies can also reduce
opportunity for gain by offsetting the positive effect of favorable price
movements in the hedged investments. For example, if the Fund entered into a
short hedge because G.T. Capital projected a decline in the price of a
security in the Fund's portfolio, and the price of that security increased
instead, the gain from that increase might be wholly or partially offset by
a decline in the price of the hedging instrument. Moreover, if the price of
the hedging instrument declined by more than the increase in the price of
the security, the Fund could suffer a loss. In either such case, the Fund
would have been in a better position had it not hedged at all.
(4) As described below, the Fund might be required to maintain assets as
"cover," maintain segregated accounts or make margin payments when it takes
positions in instruments involving obligations to third parties (I.E.,
instruments other than purchased options). If the Fund were unable to close
out its positions in such instruments, it might be required to continue to
maintain such assets or accounts or make such payments until the position
expired or matured. The requirements might impair the Fund's ability to sell
a portfolio security or make an investment at a time when it would otherwise
be favorable to do so, or require that the Fund sell a portfolio security at
a disadvantageous time. The Fund's ability to close out a position in an
investment prior to expiration or maturity depends on the existence of a
liquid secondary market or, in the absence of such a market, the ability and
willingness of the other party to the transaction ("contra party") to enter
into a transaction closing out the position. Therefore, there is no
assurance that any position can be closed out at a time and price that is
favorable to the Fund.
WRITING CALL OPTIONS
The Fund may write (sell) call options on securities, indices and currencies.
Call options will generally be written on securities and currencies that, in the
opinion of G.T. Capital, the Fund's investment manager, are not expected to make
any major price moves in the near future but that, over the long term, are
deemed to be attractive investments for the Fund.
A call option gives the holder (buyer) the right to purchase a security or
currency at a specified price (the exercise price) at any time until (American
Style) or on (European Style) a certain date (the expiration date). So long as
the obligation of the writer of a call option continues, he may be assigned an
exercise notice, requiring him to deliver the underlying security or currency
against payment of the exercise price. This obligation terminates upon the
expiration of the call option, or such earlier time at which the writer effects
a closing purchase transaction by purchasing an option identical to that
previously sold.
Portfolio securities or currencies on which call options may be written will be
purchased solely on the basis of investment considerations consistent with the
Fund's investment objectives. When writing a call option, the Fund, in return
for the premium, gives up the opportunity for profit from a price increase in
the underlying security or currency above the exercise price, and retains the
risk of loss should the price of the security or currency decline. Unlike one
who owns securities or currencies not subject to an option, the Fund has no
control over when it may be required to sell the underlying securities or
currencies, since most options may be exercised at any time prior to the
option's expiration. If a call option that the Fund has written expires, the
Fund will realize a gain in the amount of the premium; however, such gain may be
offset by a decline in the market value of the underlying security or currency
during the option period. If the call option is exercised, the Fund will realize
a gain or loss from the sale of the underlying security or currency, which will
be increased or offset by the premium received. The Fund does not consider a
security or currency covered by a call option to be "pledged" as that term is
used in the Fund's policy that limits the pledging or mortgaging of its assets.
Writing call options can serve as a limited short hedge because declines in the
value of the hedged investment would be offset to the extent of the premium
received for writing the option. However, if the security or currency
appreciates to a price higher than the exercise price of the call option, it can
be expected that the option will be exercised and the Fund will be obligated to
sell the security or currency at less than its market value.
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G.T. LATIN AMERICA GROWTH FUND
The premium that the Fund receives for writing a call option is deemed to
constitute the market value of an option. The premium the Fund will receive from
writing a call option will reflect, among other things, the current market price
of the underlying investment, the relationship of the exercise price to such
market price, the historical price volatility of the underlying investment, and
the length of the option period. In determining whether a particular call option
should be written, G.T. Capital will consider the reasonableness of the
anticipated premium and the likelihood that a liquid secondary market will exist
for those options.
Closing transactions will be effected in order to realize a profit on an
outstanding call option, to prevent an underlying security or currency from
being called, or to permit the sale of the underlying security or currency.
Furthermore, effecting a closing transaction will permit the Fund to write
another call option on the underlying security or currency with either a
different exercise price, expiration date or both.
The Fund will pay transaction costs in connection with the writing of options
and in entering into closing purchase contracts. Transaction costs relating to
options activity are normally higher than those applicable to purchases and
sales of portfolio securities.
The exercise price of the options may be below, equal to or above the current
market values of the underlying securities or currencies at the time the options
are written. From time to time, the Fund may purchase an underlying security or
currency for delivery in accordance with the exercise of an option, rather than
delivering such security or currency from its portfolio. In such cases,
additional costs will be incurred.
The Fund will realize a profit or loss from a closing purchase transaction if
the cost of the transaction is less or more, respectively, than the premium
received from writing the option. Because increases in the market price of a
call option will generally reflect increases in the market price of the
underlying security or currency, any loss resulting from the repurchase of a
call option is likely to be offset in whole or in part by appreciation of the
underlying security or currency owned by the Fund.
WRITING PUT OPTIONS
The Fund may write put options on securities, indices and currencies. A put
option gives the purchaser of the option the right to sell, and the writer
(seller) the obligation to buy, the underlying security or currency at the
exercise price at any time (American Style) or on (European Style) the
expiration date. The operation of put options in other respects, including their
related risks and rewards, is substantially identical to that of call options.
The Fund would generally write put options in circumstances where G.T. Capital
wishes to purchase the underlying security or currency for the Fund's portfolio
at a price lower than the current market price of the security or currency. In
such event, the Fund would write a put option at an exercise price that reduced
by the premium received on the option, reflects the lower price it is willing to
pay. Since the Fund would also receive interest on debt securities or currencies
maintained to cover the exercise price of the option, this technique could be
used to enhance current return during periods of market uncertainty. The risk in
such a transaction would be that the market price of the underlying security or
currency would decline below the exercise price less the premium received.
Writing put options can serve as a limited long hedge because increases in the
value of the hedged investment would be offset to the extent of the premium
received for writing the option. However, if the security or currency
depreciates to a price lower than the exercise price of the put option, it can
be expected that the put option will be exercised and the Fund will be obligated
to purchase the security or currency at more than its market value.
PURCHASING PUT OPTIONS
The Fund may purchase put options on securities, indicies and currencies. As the
holder of a put option, the Fund would have the right to sell the underlying
security or currency at the exercise price at any time until (American Style) or
on (European Style) the expiration date. The Fund may enter into closing sale
transactions with respect to such options, exercise them or permit them to
expire.
The Fund may purchase a put option on an underlying security or currency
("protective put") owned by the Fund to protect against an anticipated decline
in the value of the security or currency. Such protection is provided only
during the life of the put option when the Fund, as the holder of the put
option, is able to sell the underlying security or currency at the put exercise
price regardless of any decline in the underlying security's market price or
currency's exchange value. For example, a put option may be purchased in order
to protect unrealized appreciation of a security or currency when G.T. Capital
deems it desirable to continue to hold the security or currency because of tax
considerations. The premium paid for the put option and any transaction costs
would reduce any profit otherwise available for distribution when the security
or currency is eventually sold.
Statement of Additional Information Page 6
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G.T. LATIN AMERICA GROWTH FUND
The Fund may also purchase put options at a time when the Fund does not own the
underlying security or currency. By purchasing put options on a security or
currency it does not own, the Fund seeks to benefit from a decline in the market
price of the underlying security or currency. If the put option is not sold when
it has remaining value, and if the market price of the underlying security or
currency remains equal to or greater than the exercise price during the life of
the put option, the Fund will lose its entire investment in the put option. In
order for the purchase of a put option to be profitable, the market price of the
underlying security or currency must decline sufficiently below the exercise
price to cover the premium and transaction costs, unless the put option is sold
in a closing sale transaction.
PURCHASING CALL OPTIONS
The Fund may purchase call options or securities, indices and currencies. As the
holder of a call option, the Fund would have the right to purchase the
underlying security or currency at the exercise price at any time until
(American Style) or on (European Style) the expiration date. The Fund may enter
into closing sale transactions with respect to such options, exercise them or
permit them to expire.
Call options may be purchased by the Fund for the purpose of acquiring the
underlying security or currency for its portfolio. Utilized in this fashion, the
purchase of call options would enable the Fund to acquire the security or
currency at the exercise price of the call option plus the premium paid. At
times, the net cost of acquiring the security or currency in this manner may be
less than the cost of acquiring the security or currency directly. This
technique may also be useful to the Fund in purchasing a large block of
securities that would be more difficult to acquire by direct market purchases.
So long as it holds such a call option, rather than the underlying security or
currency itself, the Fund is partially protected from any unexpected decline in
the market price of the underlying security or currency and, in such event,
could allow the call option to expire, incurring a loss only to the extent of
the premium paid for the option.
The Fund also may purchase call options on underlying securities or currencies
it owns in order to protect unrealized gains on call options previously written
by it. A call option could be purchased for this purpose where tax
considerations make it inadvisable to realize such gains through a closing
purchase transaction. Call options may also be purchased at times to avoid
realizing losses that would result in a reduction of the Fund's current return.
For example, where the Fund has written a call option on an underlying security
or currency having a current market value below the price at which such security
or currency was purchased by the Fund, an increase in the market price could
result in the exercise of the call option written by the Fund and the
realization of a loss on the underlying security or currency. Accordingly, the
Fund could purchase a call option on the same underlying security or currency,
which could be exercised to fulfill the Fund's delivery obligations under its
written call (if it is exercised). This strategy could allow the Fund to avoid
selling the portfolio security or currency at a time when it has an unrealized
loss; however, the Fund would have to pay a premium to purchase the call option
plus transaction costs.
Aggregate premiums paid for put and call options will not exceed 5% of the
Fund's total assets at the time of purchase.
The Fund may attempt to accomplish objectives similar to those involved in using
Forward Contracts by purchasing put or call options on currencies. A put option
gives the Fund as purchaser the right (but not the obligation) to sell a
specified amount of currency at the exercise price at any time until (American
Style or on (European Style) the expiration date. A call option gives the Fund
as purchaser the right (but not the obligation) to purchase a specified amount
of currency at the exercise price at any time until (American Style) or on
(European Style) the expiration date. The Fund might purchase a currency put
option, for example, to protect itself against a decline in the dollar value of
a currency in which it holds or anticipates holding securities. If the
currency's value should decline against the dollar, the loss in currency value
should be offset, in whole or in part, by an increase in the value of the put.
If the value of the currency instead should rise against the dollar, any gain to
the Fund would be reduced by the premium it had paid for the put option. A
currency call option might be purchased, for example, in anticipation of, or to
protect against, a rise in the value against the dollar of a currency in which
the Fund anticipates purchasing securities.
Options may be either listed on an exchange or traded over-the-counter ("OTC").
Listed options are third-party contracts (I.E., performance of the obligations
of the purchaser and seller is guaranteed by the exchange or clearing
corporation), and have standardized strike prices and expiration dates. OTC
options are two-party contracts with negotiated strike prices and expiration
dates. The Fund will not purchase an OTC option unless it believes that daily
valuations for such options are readily obtainable. OTC options differ from
exchange-traded options in that OTC options are transacted with dealers directly
and not through a clearing corporation (which guarantees performance).
Consequently, there is a risk of non-performance by the dealer. Since no
exchange is involved, OTC options are valued on the basis of a quote provided by
the dealer. In the case of OTC options, there can be no assurance that a liquid
secondary market will exist for any particular option at any specific time.
Statement of Additional Information Page 7
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G.T. LATIN AMERICA GROWTH FUND
The Securities and Exchange Commission ("SEC") staff considers purchased OTC
options to be illiquid securities. The Fund may also sell OTC options and, in
connection therewith, segregate assets or cover its obligations with respect to
OTC options written by the Fund. The assets used as cover for OTC options
written by the Fund will be considered illiquid unless the OTC options are sold
to qualified dealers who agree that the Fund may repurchase any OTC option it
writes at a maximum price to be calculated by a formula set forth in the option
agreement. The cover for an OTC option written subject to this procedure would
be considered illiquid only to the extent that the maximum repurchase price
under the formula exceeds the intrinsic value of the option.
The Fund's ability to establish and close out positions in exchange-listed
options depends on the existence of a liquid market. The Fund intends to
purchase or write only those exchange-traded options for which there appears to
be a liquid secondary market. However, there can be no assurance that such a
market will exist at any particular time. Closing transactions can be made for
OTC options only by negotiating directly with the contra party, or by a
transaction in the secondary market if any such market exists. Although the Fund
will enter into OTC options only with contra parties that are expected to be
capable of entering into closing transactions with the Fund, there is no
assurance that the Fund will in fact be able to close out an OTC option position
at a favorable price prior to expiration. In the event of insolvency of the
contra party, the Fund might be unable to close out an OTC option position at
any time prior to its expiration.
INDEX OPTIONS
Puts and calls on indices are similar to puts and calls on securities or futures
contracts except that all settlements are in cash and gain or loss depends on
changes in the index in question (and thus on price movements in the securities
market or a particular market sector generally) rather than on price movements
in individual securities or futures contracts. When the Fund writes a call or an
index, it receives a premium and agrees that, prior to the expiration date, the
purchaser of the call, upon exercise of the call, will receive from the Fund an
amount of cash if the closing level of the index upon which the call is based is
greater than the exercise price of the call. The amount of cash is equal to the
difference between the closing price of the index and the exercise price of the
call times a specified multiple (the "multiplier"), which determines the total
dollar value for each point of such difference. When the Fund buys a call on an
index, it pays a premium and has the same rights as to such call as are
indicated above. When the Fund buys a put on an index, it pays a premium and has
the right, prior to the expiration date, to require the seller of the put, upon
the Fund's exercise of the put, to deliver to the Fund an amount of cash if the
closing level of the index upon which the put is based is less than the exercise
price of the put, which amount of cash is determined by the multiplier, as
described above for calls. When the Fund writes a put on an index, it receives a
premium and the purchaser has the right, prior to the expiration date, to
require the Fund to deliver to it an amount of cash equal to the difference
between the closing level of the index and the exercise price times the
multiplier, if the closing level is less than the exercise price.
The risks of investment in index options may be greater than options on
securities. Because index options are settled in cash, when the Fund writes a
call on an index it cannot provide in advance for its potential settlement
obligations by acquiring and holding the underlying securities. The Fund can
offset some of the risk of writing a call index option position by holding a
diversified portfolio of securities similar to those on which the underlying
index is based. However, the Fund cannot, as a practical matter, acquire and
hold a portfolio containing exactly the same securities as underlie the index
and, as a result, bears a risk that the value of the securities held will vary
from the value of the index.
Even if the Fund could assemble a securities portfolio that exactly reproduced
the composition of the underlying index, it still would not be fully covered
from a risk standpoint because of the "timing risk" inherent in writing index
options. When an index option is exercised, the amount of cash that the holder
is entitled to receive is determined by the difference between the exercise
price and the closing index level on the date when the option is exercised. As
with other kinds of options, the Fund as the call writer will not know that it
has been assigned until the next business day at the earliest. The time lag
between exercise and notice of assignment poses no risk for the writer of a
covered call on a specific underlying security, such as common stock, because
there the writer's obligation is to deliver the underlying security, not to pay
its value as of a fixed time in the past. So long as the writer already owns the
underlying security, it can satisfy its settlement obligations by simply
delivering it, and the risk that its value may have declined since the exercise
date is borne by the exercising holder. In contrast, even if the writer of an
index call holds securities that exactly match the composition of the underlying
index, it will not be able to satisfy its assignment obligations by delivering
those securities against payment of the exercise price. Instead, it will be
required to pay cash in an amount based on the closing index value on the
exercise date; and by the time it learns that it has been assigned, the index
may have declined, with a corresponding decline in the value of its securities
portfolio. This "timing risk" is an inherent limitation on the ability of index
call writers to cover their risk exposure by holding securities positions.
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G.T. LATIN AMERICA GROWTH FUND
If the Fund has purchased an index option and exercises it before the closing
index value for that day is available, it runs the risk that the level of the
underlying index may subsequently change. If such a change causes the exercised
option to fall out-of-the-money, the Fund will be required to pay the difference
between the closing index value and the exercise price of the option (times the
applicable multiplier) to the assigned writer.
INTEREST RATE AND CURRENCY FUTURES CONTRACTS
The Fund may enter into interest rate or currency futures contracts, and may
enter into stock index futures contracts (collectively "Futures" or "Futures
Contracts"), as a hedge against changes in prevailing levels of interest rates,
currency exchange rates or stock prices in order to establish more definitely
the effective return on securities or currencies held or intended to be acquired
by the Fund. The Fund's transactions may include sales of Futures as an offset
against the effect of expected increases in interest rates, and decreases in
currency exchange rates and stock prices, and purchases of Futures as an offset
against the effect of expected declines in interest rates, and increases in
currency exchange rates and stock prices.
The Fund will only enter into Futures Contracts that are traded on futures
exchanges and are standardized as to maturity date and underlying financial
instrument. Futures exchanges and trading thereon in the United States are
regulated under the Commodity Exchange Act by the Commodity Futures Trading
Commission ("CFTC"). Futures are exchanged in London at the London International
Financial Futures Exchange.
Although techniques other than sales and purchases of Futures Contracts could be
used to reduce the Fund's exposure to interest rate, currency exchange rate and
stock market fluctuations, the Fund may be able to hedge its exposure more
effectively and at a lower cost through using Futures Contracts.
A Futures Contract provides for the future sale by one party and purchase by
another party of a specified amount of a specific financial instrument (security
or currency) for a specified price at a designated date, time and place. An
index Futures Contract provides for the delivery, at a designated date, time and
place, of an amount of cash equal to a specified dollar amount times the
difference between the index value at the close of trading on the contract and
the price at which the Futures Contract is originally struck; no physical
delivery of the securities comprising the index is made. Brokerage fees are
incurred when a Futures Contract is bought or sold, and margin deposits must be
maintained at all times the Futures Contract is outstanding.
Although Futures Contracts typically require future delivery of and payment for
financial instruments or currencies, Futures Contracts are usually closed out
before the delivery date. Closing out an open Futures Contract sale or purchase
is effected by entering into an offsetting Futures Contract purchase or sale,
respectively, for the same aggregate amount of the identical financial
instrument or currency and the same delivery date. If the offsetting purchase
price is less than the original sale price, the Fund realizes a gain; if it is
more, the Fund realizes a loss. Conversely, if the offsetting sale price is more
than the original purchase price, the Fund realizes a gain; if it is less, the
Fund realizes a loss. The transaction costs must also be included in these
calculations. There can be no assurance, however, that the Fund will be able to
enter into an offsetting transaction with respect to a particular Futures
Contract at a particular time. If the Fund is not able to enter into an
offsetting transaction, the Fund will continue to be required to maintain the
margin deposits on the Futures Contract.
As an example of an offsetting transaction, the contractual obligations arising
from the sale of one Futures Contract of September Treasury Bills on an exchange
may be fulfilled at any time before delivery under the Futures Contract is
required (I.E., on a specified date in September, the "delivery month") by the
purchase of another Futures Contract of September Treasury Bills on the same
exchange. In such instance the difference between the price at which the Futures
Contract was sold and the price paid for the offsetting purchase, after
allowance for transaction costs, represents the profit or loss to the Fund.
The Fund's Futures transactions will be entered into for hedging purposes; that
is, Futures Contracts will be sold to protect against a decline in the price of
securities or currencies that the Fund owns, or Futures Contracts will be
purchased to protect the Fund against an increase in the price of securities or
currencies it has committed to purchase or expects to purchase.
"Margin" with respect to Futures Contracts is the amount of funds that must be
deposited by the Fund in order to initiate Futures trading and to maintain the
Fund's open positions in Futures Contracts. A margin deposit made when the
Futures Contract is entered into ("initial margin") is intended to assure the
Fund's performance under the Futures Contract. The margin required for a
particular Futures Contract is set by the exchange on which the Futures Contract
is traded and may be significantly modified from time to time by the exchange
during the term of the Futures Contract.
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G.T. LATIN AMERICA GROWTH FUND
Subsequent payments, called "variation margin," to and from the futures
commission merchant through which the Fund entered into the Futures Contract
will be made on a daily basis as the price of the underlying security, currency
or index fluctuates making the Futures Contract more or less valuable, a process
known as marking-to-market.
RISKS OF USING FUTURES CONTRACTS. The prices of Futures Contracts are
volatile and are influenced, among other things, by actual and anticipated
changes in interest rates and currency exchange rates, and in stock market
movements, which in turn are affected by fiscal and monetary policies and
national and international political and economic events.
There is a risk of imperfect correlation between changes in prices of Futures
Contracts and prices of the securities or currencies in the Fund's portfolio
being hedged. The degree of imperfection of correlation depends upon
circumstances such as: variations in speculative market demand for Futures and
for securities or currencies, including technical influences in Futures trading;
and differences between the financial instruments being hedged and the
instruments underlying the standard Futures Contracts available for trading. A
decision of whether, when and how to hedge involves skill and judgment, and even
a well-conceived hedge may be unsuccessful to some degree because of unexpected
market behavior or interest or currency rate trends.
Because of the low margin deposits required, Futures trading involves an
extremely high degree of leverage. As a result, a relatively small price
movement in a Futures Contract may result in immediate and substantial loss, as
well as gain, to the investor. For example, if at the time of purchase, 10% of
the value of the Futures Contract is deposited as margin, a subsequent 10%
decrease in the value of the Futures Contract would result in a total loss of
the margin deposit, before any deduction for the transaction costs, if the
account were then closed out. A 15% decrease would result in a loss equal to
150% of the original margin deposit, if the Futures Contract were closed out.
Thus, a purchase or sale of a Futures Contract may result in losses in excess of
the amount invested in the Futures Contract.
Most U.S. Futures exchanges limit the amount of fluctuation permitted in Futures
Contract and options on Futures Contract prices during a single trading day. The
daily limit establishes the maximum amount that the price of a Futures Contract
or option may vary either up or down from the previous day's settlement price at
the end of a trading session. Once the daily limit has been reached in a
particular type of Futures Contract or option, no trades may be made on that day
at a price beyond that limit. The daily limit governs only price movement during
a particular trading day and therefore does not limit potential losses, because
the limit may prevent the liquidation of unfavorable positions. Futures Contract
and option prices have occasionally moved to the daily limit for several
consecutive trading days with little or no trading, thereby preventing prompt
liquidation of positions and subjecting some traders to substantial losses.
If the Fund were unable to liquidate a Futures or option on Futures position due
to the absence of a liquid secondary market or the imposition of price limits,
it could incur substantial losses. The Fund would continue to be subject to
market risk with respect to the position. In addition, except in the case of
purchased options, the Fund would continue to be required to make daily
variation margin payments and might be required to maintain the position being
hedged by the Future or option or to maintain cash or securities in a segregated
account.
Certain characteristics of the Futures market might increase the risk that
movements in the prices of Futures Contracts or options on Futures might not
correlate perfectly with movements in the prices of the investments being
hedged. For example, all participants in the Futures and options on Futures
Markets are subject to daily variation margin calls and might be compelled to
liquidate Futures or options on Futures positions whose prices are moving
unfavorably to avoid being subject to further calls. These liquidations could
increase price volatility of the instruments and distort the normal price
relationship between the Futures or options and the investments being hedged.
Also, because initial margin deposit requirements in the Futures market are less
onerous than margin requirements in the securities markets, there might be
increased participation by speculators in the Futures markets. This
participation also might cause temporary price distortions. In addition,
activities of large traders in both the Futures and securities markets involving
arbitrage, "program trading" and other investment strategies might result in
temporary price distortions.
If the Fund were unable to liquidate a Futures or option on Futures position due
to the absence of a liquid secondary market or the imposition of price limits,
it could incur substantial losses. The Fund would continue to be subject to
market risk with respect to the position. In addition, except in the case of
purchased options, the Fund would continue to be required to make daily
variation margin payments and might be required to maintain the position being
hedged by the Future or option or to maintain cash or securities in a segregated
account.
Certain characteristics of the Futures market might increase the risk that
movements in the prices of Futures Contracts or options on Futures might not
correlate perfectly with movements in the prices of the investments being
hedged. For example, all participants in the Futures and options on Futures
markets are subject to daily variation margin calls and might be compelled to
liquidate Futures or options on Futures positions whose prices are moving
unfavorably to avoid
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G.T. LATIN AMERICA GROWTH FUND
being subject to further calls. These liquidations could increase price
volatility of the instruments and distort the normal price relationship between
the Futures or options and the investments being hedged. Also, because initial
margin deposit requirements in the Futures market are less onerous than margin
requirements in the securities markets, there might be increased participation
by speculators in the Futures markets. This participation also might cause
temporary price distortions. In addition, activities of large traders in both
the Futures and securities markets involving arbitrage, "program trading" and
other investment strategies might result in temporary price distortions.
OPTIONS ON FUTURES CONTRACTS
Options on Futures Contracts are similar to options on securities or currencies
except that options on Futures Contracts give the purchaser the right, in return
for the premium paid, to assume a position in a Futures Contract (a long
position if the option is a call and a short position if the option is a put),
at a specified exercise price at any time during the period of the option. Upon
exercise of the option, the delivery of the Futures position by the writer of
the option to the holder of the option will be accompanied by delivery of the
accumulated balance in the writer's Futures margin account, which represents the
amount by which the market price of the Futures Contract, at exercise, exceeds
(in the case of a call) or is less than (in the case of a put) the exercise
price of the option on the Futures Contract. If an option is exercised on the
last trading day prior to the expiration date of the option, the settlement will
be made entirely in cash equal to the difference between the exercise price of
the option and the closing level of the securities, currencies or index upon
which the Futures Contract is based on the expiration date. Purchasers of
options who fail to exercise their options prior to the exercise date suffer a
loss of the premium paid.
The purchase of call options on Futures can serve as a long hedge, and the
purchase of put options on Futures can serve as a short hedge. Writing call
options on Futures can serve as a limited short hedge, and writing put options
on Futures can serve as a limited long hedge, using a strategy similar to that
used for writing options on securities, foreign currencies or indices.
If the Fund writes an option on a Futures Contract, it will be required to
deposit initial and variation margin pursuant to requirements similar to those
applicable to Futures Contracts. Premiums received from the writing of an option
on a Futures Contract are included in the initial margin deposit.
The Fund may seek to close out an option position by selling an option covering
the same Futures Contract and having the same exercise price and expiration
date. The ability to establish and close out positions on such options is
subject to the maintenance of a liquid secondary market.
LIMITATION ON USE OF FUTURES, OPTIONS ON FUTURES AND CERTAIN OPTIONS ON
CURRENCIES
To the extent that the Fund enters into Futures Contracts, options on Futures
Contracts, and options on foreign currencies traded on a CFTC-regulated
exchange, in each case other than for BONA FIDE hedging purposes (as defined by
the CFTC), the aggregate initial margin and premiums required to establish those
positions (excluding the amount by which options are "in-the-money") will not
exceed 5% of the liquidation value of the Fund's portfolio, after taking into
account unrealized profits and unrealized losses on any contracts the Fund has
entered into. In general, a call option on a Futures Contract is "in-the-money"
if the value of the underlying Futures Contract exceeds the strike, I.E.,
exercise, price of the call; a put option on a Futures Contract is
"in-the-money" if the value of the underlying Futures Contract is exceeded by
the strike price of the put. This guideline may be modified by the Company's
Board of Directors without a shareholder vote. This limitation does not limit
the percentage of the Fund's assets at risk to 5%.
FORWARD CURRENCY CONTRACTS
A Forward Contract is an obligation, usually arranged with a commercial bank or
other currency dealer, to purchase or sell a currency against another currency
at a future date and price as agreed upon by the parties. The Fund may either
accept or make delivery of the currency at the maturity of the Forward Contract.
The Fund may also, if its contra party agrees, prior to maturity, enter into a
closing transaction involving the purchase or sale of an offsetting contract.
The Fund engages in forward currency transactions in anticipation of, or to
protect itself against, fluctuations in exchange rates. The Fund might sell a
particular foreign currency forward, for example, when it holds securities
denominated in a foreign currency but anticipates, and seeks to be protected
against, a decline in the currency against the U.S. dollar. Similarly, the Fund
might sell the U.S. dollar forward when it holds securities denominated in U.S.
dollars, but anticipates, and seeks to be protected against, a decline in the
U.S. dollar relative to other currencies. Further, the Fund might purchase a
currency forward to "lock in" the price of securities denominated in that
currency that it anticipates purchasing.
Forward Contracts are traded in the interbank market conducted directly between
currency traders (usually large commercial banks) and their customers. A Forward
Contract generally has no deposit requirement, and no commissions are
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G.T. LATIN AMERICA GROWTH FUND
charged at any stage for trades. The Fund will enter into such Forward Contracts
with major U.S. or foreign banks and securities or currency dealers in
accordance with guidelines approved by the Company's Board of Directors.
The Fund may enter into Forward Contracts either with respect to specific
transactions or with respect to the Fund's portfolio positions. The precise
matching of the Forward Contract amounts and the value of specific securities
will not generally be possible because the future value of such securities in
foreign currencies will change as a consequence of market movements in the value
of those securities between the date the Forward Contract is entered into and
the date it matures. Accordingly, it may be necessary for the Fund to purchase
additional foreign currency on the spot (I.E., cash) market (and bear the
expense of such purchase) if the market value of the security is less than the
amount of foreign currency the Fund is obligated to deliver and if a decision is
made to sell the security and make delivery of the foreign currency. Conversely,
it may be necessary to sell on the spot market some of the foreign currency the
Fund is obligated to deliver. The projection of short-term currency market
movements is extremely difficult, and the successful execution of a short-term
hedging strategy is highly uncertain. Forward Contracts involve the risk that
anticipated currency movements will not be accurately predicted, causing the
Fund to sustain losses on these contracts and transaction costs.
At or before the maturity of a Forward Contract requiring the Fund to sell a
currency, the Fund may either sell a portfolio security and use the sale
proceeds to make delivery of the currency or retain the security and offset its
contractual obligation to deliver the currency by purchasing a second contract
pursuant to which the Fund will obtain, on the same maturity date, the same
amount of the currency that it is obligated to deliver. Similarly, the Fund may
close out a Forward Contract requiring it to purchase a specified currency by,
if its contra party agrees, entering into a second contract entitling it to sell
the same amount of the same currency on the maturity date of the first contract.
The Fund would realize a gain or loss as a result of entering into such an
offsetting Forward Contract under either circumstance to the extent the exchange
rate or rates between the currencies involved moved between the execution dates
of the first contract and the offsetting contract.
The cost to the Fund of engaging in Forward Contracts varies with factors such
as the currencies involved, the length of the contract period and the market
conditions then prevailing. Because Forward Contracts are usually entered into
on a principal basis, no fees or commissions are involved. The use of Forward
Contracts does not eliminate fluctuations in the prices of the underlying
securities the Fund owns or intends to acquire, but it does establish a rate of
exchange in advance. In addition, while Forward Contract Sales limit the risk of
loss due to a decline in the value of the hedged currencies, at the same time
they limit any potential gain that might result should the value of the
currencies increase.
FOREIGN CURRENCY STRATEGIES -- SPECIAL CONSIDERATIONS
The Fund may use options on foreign currencies, Futures on foreign currencies,
options on Futures on foreign currencies and Forward Contracts to hedge against
movements in the values of the foreign currencies in which the Fund's securities
are denominated. Such currency hedges can protect against price movements in a
security that the Fund owns or intends to acquire that are attributable to
changes in the value of the currency in which it is denominated. Such hedges do
not, however, protect against price movements in the securities that are
attributable to other causes.
The Fund might seek to hedge against changes in the value of a particular
currency when no Futures Contract, Forward Contract or option involving that
currency is available or one of such contracts is more expensive than certain
other contracts. In such cases, the Fund may hedge against price movements in
that currency by entering into a contract on another currency or basket of
currencies, the values of which G.T. Capital believes will have a positive
correlation to the value of the currency being hedged. The risk that movements
in the price of the contract will not correlate perfectly with movements in the
price of the currency being hedged is magnified when this strategy is used.
The value of Futures Contracts, options on Futures Contracts, Forward Contracts
and options on foreign currencies depends on the value of the underlying
currency relative to the U.S dollar. Because foreign currency transactions
occurring in the interbank market might involve substantially larger amounts
than those involved in the use of Futures Contracts, Forward Contracts or
options, the Fund could be disadvantaged by dealing in the odd lot market
(generally consisting of transactions of less than $1 million) for the
underlying foreign currencies at prices that are less favorable than for round
lots.
There is no systematic reporting of last sale information for foreign currencies
or any regulatory requirements that quotations available through dealers or
other market sources be firm or revised on a timely basis. Quotation information
generally is representative of very large transactions in the interbank market
and thus might not reflect odd-lot transactions where rates might be less
favorable. The interbank market in foreign currencies is a global,
round-the-clock market. To the extent the U.S. options or Futures markets are
closed while the markets for the underlying currencies remain open,
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G.T. LATIN AMERICA GROWTH FUND
significant price and rate movements might take place in the underlying markets
that cannot be reflected in the markets for the Futures contracts or options
until they reopen.
Settlement of Futures Contracts, Forward Contracts and options involving foreign
currencies might be required to take place within the country issuing the
underlying currency. Thus, the Fund might be required to accept or make delivery
of the underlying foreign currency in accordance with any U.S. or foreign
regulations regarding the maintenance of foreign banking arrangements by U.S.
residents and might be required to pay any fees, taxes and charges associated
with such delivery assessed in the issuing country.
COVER
Transactions using Forward Contracts, Futures Contracts and options (other than
options that the Fund has purchased) expose the Fund to an obligation to another
party. The Fund will not enter into any such transactions unless it owns either
(1) an offsetting ("covered") position in securities, currencies, or other
options, Forward Contracts or Futures Contracts, or (2) cash, receivables and
short-term debt securities with a value sufficient at all times to cover its
potential obligations not covered as provided in (1) above. The Fund will comply
with SEC guidelines regarding cover for these instruments and, if the guidelines
so require, set aside cash, U.S. government securities or other liquid,
high-grade debt securities in a segregated account with its custodian in the
prescribed amount.
Assets used as cover or held in a segregated account cannot be sold while the
position in the corresponding Forward Contract, Futures Contract or option is
open, unless they are replaced with other appropriate assets. If a large portion
of the Fund's assets are used for cover or segregated accounts, it could affect
portfolio management or the Fund's ability to meet redemption requests or other
current obligations.
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RISK FACTORS
- --------------------------------------------------------------------------------
POLITICAL, SOCIAL AND ECONOMIC RISKS. Investing in securities of non-U.S.
companies may entail additional risks due to the potential political, social and
economic instability of certain countries and the risks of expropriation,
nationalization, confiscation or the imposition of restrictions on foreign
investment, convertibility of currencies into U.S. dollars and on repatriation
of capital invested. In the event of such expropriation, nationalization or
other confiscation by any country, the Fund could lose its entire investment in
any such country.
In addition, even though opportunities for investment may exist in Latin
American countries, any change in the leadership or policies of the governments
of those countries or in the leadership or policies of any other government
which exercises a significant influence over those countries, may halt the
expansion of or reverse the liberalization of foreign investment policies now
occurring and thereby eliminate any investment opportunities which may currently
exist.
Investors should note that upon the accession to power of authoritarian regimes,
the governments of a number of Latin American countries previously expropriated
large quantities of real and personal property, similar to the property which
will be represented by the securities purchased by the Fund. The claims of
property owners against those governments were never finally settled. There can
be no assurance that any property represented by securities purchased by the
Fund will not also be expropriated, nationalized, or otherwise confiscated. If
such confiscation were to occur, the Fund could lose a substantial portion of
its investments in such countries. The Fund's investments would similarly be
adversely affected by exchange control regulations in any of those countries.
Certain countries in which the Fund may invest may have groups that advocate
radical religious or revolutionary philosophies or support ethnic independence.
Any disturbance on the part of such individuals could carry the potential for
widespread destruction or confiscation of property owned by individuals and
entities foreign to such country and could cause the loss of the Fund's
investment in those countries. Instability may also result from, among other
things: (i) authoritarian governments or military involvement in political and
economic decision-making, including changes in government through extra
constitutional means; (ii) popular unrest associated with demands for improved
political, economic and social conditions; and (iii) hostile relations with
neighboring or other countries. Such political, social and economic instability
could disrupt the principal financial markets in which the Fund invests and
adversely affect the value of the Fund's assets.
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G.T. LATIN AMERICA GROWTH FUND
ILLIQUID SECURITIES. The Fund may invest up to 10% of its total assets in
illiquid securities. Securities may be considered illiquid if the Fund cannot
reasonably expect within seven days to sell the securities for approximately the
amount at which the Fund values such securities. See "Investment Limitations."
The sale of illiquid securities, if they can be sold at all, generally will
require more time and result in higher brokerage charges or dealer discounts and
other selling expenses than will the sale of liquid securities such as
securities eligible for trading on U.S. securities exchanges or in the over-the-
counter markets. Moreover, restricted securities, which may be illiquid for
purposes of this limitation, often sell, if at all, at a price lower than
similar securities that are not subject to restrictions on resale.
With respect to liquidity determinations generally, the Company's Board of
Directors has the ultimate responsibility for determining whether specific
securities, including restricted securities pursuant to Rule 144A under the
Securities Act of 1933, are liquid or illiquid. The Board has delegated the
function of making day-to-day determinations of liquidity to G.T. Capital in
accordance with procedures approved by the Company's Board of Directors. G.T.
Capital takes into account a number of factors in reaching liquidity decisions,
including, but not limited to: (i) the frequency of trading in the security;
(ii) the number of dealers who make quotes for the security; (iii) the number of
dealers that have undertaken to make a market in the security; (iv) the number
of other potential purchasers; and (v) the nature of the security and how
trading is effected (e.g., the time needed to sell the security, how offers are
solicited and the mechanics of transfer). G.T. Capital monitors the liquidity of
securities in the Fund's portfolio and periodically reports such determinations
to the Board of Directors. Moreover, as noted in the Prospectus, certain
securities, such as those subject to repatriation restrictions of more than
seven days, will generally be treated as illiquid.
More than 10% of the Fund's total assets may consist of illiquid securities from
time to time either because of adverse events which occur following the purchase
of the securities which cause them to become illiquid or because liquid
securities are sold to meet redemption requests or other needs of the Fund.
Illiquid securities are more difficult to value accurately due to, among other
things, the fact that such securities often trade infrequently or only in
smaller amounts.
On December 31, 1994 the market capitalizations of listed equity securities on
the major exchanges in Argentina, Brazil (Sao Paulo only for market
capitalization), Chile and Mexico were US$24.2 billion, $94.8 billion, $38.8
billion and $108.4 billion. By comparison, at December 31, 1994 the market
capitalization of the NYSE alone was US$4.4 trillion. A high proportion of the
shares of many Latin American companies may be held by a limited number of
persons, which may further limit the number of shares available for investment
by the Fund. A limited number of issuers in most, if not all, Latin American
securities markets may represent a disproportionately large percentage of market
capitalization and trading value. The limited liquidity of Latin American
securities markets also may affect the Fund's ability to acquire or dispose of
securities at the price and time it wishes to do so. In addition, certain Latin
American securities markets, including those of Argentina, Brazil, Chile and
Mexico, are susceptible to being influenced by large investors trading
significant blocks of securities or by large dispositions of securities
resulting from the failure to meet margin calls when due.
The high volatility of certain Latin American securities markets is evidenced by
dramatic movements in the Brazilian and Mexican markets in recent years. The
stock markets in Brazil declined sharply in mid 1989, and closed briefly,
following a large settlement failure. Another significant decline occurred in
the first quarter of 1990. In 1987, the Mexican stock exchange experienced a
severe correction, its index declining over 70 percent. This market volatility
may result in greater volatility in the Fund's net asset value than would be the
case for companies investing in domestic securities. If the Fund were to
experience unexpected net redemptions, it could be forced to sell securities in
its portfolio without regard to investment merit, thereby decreasing the asset
base over which Fund expenses can be spread and possibly reducing the Fund's
rate of return.
FOREIGN INVESTMENT RESTRICTIONS. Certain countries prohibit or impose
substantial restrictions on investments in their capital markets, particularly
their equity markets, by foreign entities such as the Fund. These restrictions
or controls may at times limit or preclude investment in certain securities and
may increase the cost and expenses of the Fund. For example, certain countries
require prior governmental approval before investments by foreign persons may be
made, or limit the amount of investment by foreign persons in a particular
company, or limit the investment by foreign persons to only a specific class of
securities of a company that may have less advantageous terms than securities of
the company available for purchase by nationals. Moreover, the national policies
of certain countries may restrict investment opportunities in issuers or
industries deemed sensitive to national interests. In addition, some countries
require governmental approval for the repatriation of investment income, capital
or the proceeds of securities sales by foreign investors. In addition, if there
is a deterioration in a country's balance of payments or for other reasons, a
country may impose restrictions on foreign capital remittances abroad. The Fund
could be adversely affected by delays in, or a refusal to grant, any required
governmental approval for repatriation, as well as by the application to it of
other restrictions on investments.
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G.T. LATIN AMERICA GROWTH FUND
Recent relevant foreign investment restrictions in each of the four principal
economies of Latin America, which are susceptible to significant and immediate
changes, can be summarized in part as follows:
ARGENTINA. Previous restrictions on foreign investment have been abolished
and prior approval of such investment is no longer required (except where
required in specific statutes governing certain activities), ensuring equal
treatment of national and foreign capital applied to economic activities. At
present foreign capital can move freely in and out of Argentina and no foreign
exchange restrictions are applied to dividend or capital gains remittance.
BRAZIL. Under regulations adopted by the government of Brazil, the Fund is
able to purchase Brazilian securities without regard to any diversification or
repatriation restrictions. However, the regulations require that the Fund's
investments be limited to securities issued by publicly-held corporations
acquired on the Brazilian stock exchanges or on over-the-counter markets
organized by the Commission de Valores Mobiliarios (CVM) or units of certain
Financial Investment Funds. The Fund's authority to invest in Brazil pursuant to
this regulation remains subject to approval by the CVM. In addition, the Fund is
required to appoint a Brazilian administrator to perform certain functions with
respect to its holdings of Brazilian securities.
CHILE. Direct investment by foreign investors in Chile is subject to certain
Chilean investment restrictions, including a requirement that invested capital
must remain in Chile for a minimum of at least one year. The remittance of
dividends and capital gains can be effected without material restrictions on
timing and amount. Indirect investments, however, may be made through already
established investment funds and such investments will not be subject to the
restriction regarding residency of capital, although they will be subject to the
limitations, described above, regarding investments by the Fund in the
securities of other investment companies. In addition to investing indirectly in
the Chilean market, the Fund may establish its own foreign investment fund in
Chile for which a Chilean administrator will be required. The Fund may also gain
access to investment in Chile via the 8 American Depositary Receipts ("ADRs")
currently traded in the U.S. on the New York Stock Exchange. Another 12 Chilean
companies plan ADR listings in the U.S. in 1994. G.T. Global believes these
events significantly broaden the Fund's ability to gain access to the Chilean
market.
MEXICO. Generally, foreigners may directly acquire shares of Mexican
companies up to a limit of 49 percent of the share capital of the issuer without
prior approval. Foreigners may acquire shares in the share capital of certain
Mexican listed companies usually reserved to Mexican nationals, and may acquire
in excess of the 49 percent limit referred to above, through trust arrangements
with Nacional Financiera, S.N.C. ("Nafin"), the Mexican government development
finance bank. Under this arrangement Nafin will acquire the securities that the
Fund purchases and then issue Ordinary Certificates of Participation ("CEPOS").
As a holder of the CEPOS, the Fund would have all rights of the shares acquired,
but it would not have voting rights. There are no restrictions on the movement
of capital in and out of Mexico. Dividends and capital gains can also be freely
remitted, subject to any withholding tax.
G.T. Global believes that the Fund may invest a greater percentage of its assets
than previously in Venezuela if political and economic conditions change
materially. The following are relevant foreign investment restrictions relating
to Venezuela.
VENEZUELA. In order to stabilize the country's financial system, the
government suspended foreign exchange trading on July 6, 1994. The market was
"officially" opened July 11, however, the Bolivar did not begin trading until
January 10, 1995 at a level of 212 and 220 (the level held since December 1994).
The Venezuelan Exchange Administration Board issued Resolution No. 41 regarding
foreign investment registration and repatriation for capital dividends and
interest. The Resolution provides that all investment should be registered with
the Superintendency of Foreign Investment (SEIX) and the Technical
Administration Exchange Office (OTAC). Article 2 of the Resolution states that
"investments" is defined as those transactions executed through the local stock
exchange (this prohibits OTC transaction proceeds from being eligible for
repatriation).
Resolution No. 41 also required refiling by funds previously approved. The Fund
has complied with the regulations and has obtained approval by the Regulatory
Commission. This avoids jeopardizing the assets held by the fund.
In November 1994 the government passed a Resolution allowing foreign investors
to repatriate without restrictions under the new controlled exchange system. It
is now possible to repatriate any capital or income provided that the OTAC has
proof that the investor has obtained a tax identification code and complied with
all tax return filing requirements.
NON-UNIFORM CORPORATE DISCLOSURE STANDARDS AND GOVERNMENTAL
REGULATION. Foreign companies are subject to accounting, auditing and financial
standards and requirements that differ, in some cases significantly, from those
applicable to U.S. companies. In particular, the assets, liabilities and profits
appearing on the financial statements of such a company may not reflect its
financial position or results of operations in the way they would be reflected
had such financial statements been prepared in accordance with U.S. generally
accepted accounting principles. Most of the securities held by the Fund
Statement of Additional Information Page 15
<PAGE>
G.T. LATIN AMERICA GROWTH FUND
will not be registered with the SEC or regulators of any foreign country, nor
will the issuers thereof be subject to the SEC's reporting requirements. Thus,
there will be less available information concerning most foreign issuers of
securities held by the Fund than is available concerning U.S. issuers. In
instances where the financial statements of an issuer are not deemed to reflect
accurately the financial situation of the issuer, G.T. Capital will take
appropriate steps to evaluate the proposed investment, which may include on-site
inspection of the issuer, interviews with its management and consultations with
accountants, bankers and other specialists. There is substantially less publicly
available information about foreign companies than there are reports and ratings
published about U.S. companies and the U.S. government. In addition, where
public information is available, it may be less reliable than such information
regarding U.S. issuers. In addition, for companies that keep accounting records
in local currency, inflation accounting rules in some Latin American countries
require, for both tax and accounting purposes, that certain assets and
liabilities be restated on the company's balance sheet in order to express items
in terms of currency of constant purchasing power. Inflation accounting may
indirectly generate losses or profits. Consequently, data concerning Latin
American securities shown elsewhere in this Statement of Additional Information
may be materially affected by restatements for inflation and may not accurately
reflect the real conditions of companies and securities markets. There is
substantially less publicly available information about foreign companies,
including Latin American companies, and the governments of Latin American
countries than there are reports and ratings published about U.S. companies and
the U.S. Government. In addition, where public information is available, it may
be less reliable than such information regarding U.S. issuers. Issuers of
securities in foreign jurisdictions are generally not subject to the same degree
of regulation as are U.S. issuers with respect to such matters as restrictions
on market manipulation, insider trading rules, shareholder proxy requirements
and timely disclosure of information.
CURRENCY FLUCTUATIONS. Because the Fund under normal circumstances will
invest a substantial portion of its total assets in the securities of foreign
issuers which are denominated in foreign currencies, the strength or weakness of
the U.S. dollar against such foreign currencies will account for part of the
Fund's investment performance. A decline in the value of any particular currency
against the U.S. dollar will cause a decline in the U.S. dollar value of the
Fund's holdings of securities and cash denominated in such currency and,
therefore, will cause an overall decline in the Fund's net asset value and any
net investment income and capital gains derived from such securities to be
distributed in U.S. dollars to shareholders of the Fund. Moreover, if the value
of the foreign currencies in which the Fund receives its income falls relative
to the U.S. dollar between receipt of the income and the making of Fund
distributions, the Fund may be required to liquidate securities in order to make
distributions if the Fund has insufficient cash in U.S. dollars to meet
distribution requirements.
The rate of exchange between the U.S. dollar and other currencies is determined
by several factors including the supply and demand for particular currencies,
central bank efforts to support particular currencies, the relative movement of
interest rates and pace of business activity in the other countries and the
United States, and other economic and financial conditions affecting the world
economy.
Although the Fund values its assets daily in terms of U.S. dollars, the Fund
does not intend to convert its holdings of foreign currencies into U.S. dollars
on a daily basis. The Fund will do so from time to time, and investors should be
aware of the costs of currency conversion. Although foreign exchange dealers do
not charge a fee for conversion, they do realize a profit based on the
difference (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 the Fund at one rate, while offering a lesser rate of exchange should the
Fund desire to sell that currency to the dealer.
ADVERSE MARKET CHARACTERISTICS. Securities of many foreign issuers may be
less liquid and their prices more volatile than securities of comparable U.S.
issuers. In addition, foreign securities markets and brokers are generally
subject to less governmental supervision and regulation than in the United
States, and foreign securities transactions are usually subject to fixed
commissions, which are generally higher than negotiated commissions on U.S.
transactions. In addition, foreign securities transactions may be subject to
difficulties associated with the settlement of such transactions. Delays in
settlement could result in temporary periods when assets of the Fund are
uninvested and no return is earned thereon. The inability of the Fund to make
intended security purchases due to settlement problems could cause the Fund to
miss attractive investment opportunities. Inability to dispose of a portfolio
security due to settlement problems either could result in losses to the Fund
due to subsequent declines in value of the portfolio security or, if the Fund
has entered into a contract to sell the security, could result in possible
liability to the purchaser. G.T. Capital will consider such difficulties when
determining the allocation of the Fund's assets, although G.T. Capital does not
believe that such difficulties will have a material adverse effect on the Fund's
portfolio trading activities.
The Fund may use foreign custodians, which may involve risks in addition to
those related to the use of U.S. custodians. Such risks include uncertainties
relating to: (i) determining and monitoring the financial strength, reputation
and
Statement of Additional Information Page 16
<PAGE>
G.T. LATIN AMERICA GROWTH FUND
standing of the foreign custodian; (ii) maintaining appropriate safeguards to
protect the Fund's investments and (iii) possible difficulties in obtaining and
enforcing judgments against such custodians.
SOVEREIGN DEBT. Sovereign Debt generally offers high yields, reflecting not
only perceived credit risk, but also the need to compete with other local
investments in domestic financial markets. Certain Latin American countries are
among the largest debtors to commercial banks and foreign governments. A
sovereign debtor's willingness or ability to repay principal and interest due in
a timely manner may be affected by, among other factors, its cash flow
situation, the extent of its foreign reserves, the availability of sufficient
foreign exchange on the date a payment is due, the relative size of the debt
service burden to the economy as a whole, the sovereign debtor's policy towards
the International Monetary Fund and the political constraints to which a
sovereign debtor may be subject. Sovereign debtors may default on their
Sovereign Debt. Sovereign debtors may also be dependent on expected
disbursements from foreign governments, multilateral agencies and others abroad
to reduce principal and interest arrearages on their debt. The commitment on the
part of these governments, agencies and others to make such disbursements may be
conditioned on a sovereign debtor's implementation of economic reforms and/or
economic performance and the timely service of such debtor's obligations.
Failure to implement such reforms, achieve such levels of economic performance
or repay principal or interest when due, may result in the cancellation of such
third parties' commitments to lend funds to the sovereign debtor, which may
further impair such debtor's ability or willingness to timely service its debts.
In recent years, some of the Latin American countries in which the Fund expects
to invest have encountered difficulties in servicing their Sovereign Debt. Some
of these countries have withheld payments of interest and/or principal of
Sovereign Debt. These difficulties have also led to agreements to restructure
external debt obligations -- in particular, commercial bank loans, typically by
rescheduling principal payments, reducing interest rates and extending new
credits to finance interest payments on existing debt. In the future, holders of
Sovereign Debt may be requested to participate in similar reschedulings of such
debt.
The ability of Latin American governments to make timely payments on their
Sovereign Debt is likely to be influenced strongly by a country's balance of
trade and its access to trade and other international credits. A country whose
exports are concentrated in a few commodities could be vulnerable to a decline
in the international prices of one or more of such commodities. Increased
protectionism on the part of a country's trading partners could also adversely
affect its exports. Such events could diminish a country's trade account
surplus, if any. To the extent that a country receives payment for its exports
in currencies other than hard currencies, its ability to make hard currency
payments could be affected.
The occurrence of political, social or diplomatic changes in one or more of the
countries issuing Sovereign Debt could adversely affect the Fund's investments.
The countries issuing such instruments are faced with social and political
issues and some of them have experienced high rates of inflation in recent years
and have extensive internal debt. Among other effects, high inflation and
internal debt service requirements may adversely affect the cost and
availability of future domestic sovereign borrowing to finance governmental
programs, and may have other adverse social, political and economic
consequences. Political changes or a deterioration of a country's domestic
economy or balance of trade may affect the willingness of countries to service
their Sovereign Debt. While G.T. Capital intends to manage the Fund's portfolio
in a manner that will minimize the exposure to such risks, there can be no
assurance that adverse political changes will not cause the Fund to suffer a
loss of interest or principal on any of its holdings.
Periods of economic uncertainty may result in the volatility of market prices of
Sovereign Debt and in turn, the Fund's net asset value, to a greater extent than
the volatility inherent in domestic securities. The value of Sovereign Debt will
likely vary inversely with changes in prevailing interest rates, which are
subject to considerable variance in the international market. If the Fund were
to experience unexpected net redemptions, it may be forced to sell Sovereign
Debt in its portfolio without regard to investment merit, thereby decreasing its
asset base over which Fund expenses can be spread and possibly reducing its rate
of return.
WITHHOLDING TAXES. The Fund's net investment income from foreign issuers may
be subject to withholding taxes by the foreign country issuers, thereby reducing
the Fund's net investment income or delaying the receipt of income where those
taxes may be recaptured. See "Taxes."
SPECIAL CONSIDERATIONS AFFECTING EMERGING MARKETS. Emerging securities
markets, such as the markets of Latin America, are substantially smaller, less
developed, less liquid and more volatile than the major securities markets. The
limited size of emerging securities markets and limited trading volume in
issuers compared to the volume of trading in U.S. securities could cause prices
to be erratic for reasons apart from factors that affect the quality of the
securities. For example, limited market size may cause prices to be unduly
influenced by traders who control large positions. Adverse publicity and
investors' perceptions, whether or not based on fundamental analysis, may
decrease the value and liquidity of portfolio
Statement of Additional Information Page 17
<PAGE>
G.T. LATIN AMERICA GROWTH FUND
securities, especially in these markets. In addition, securities traded in
certain emerging markets may be subject to risks due to the inexperience of
financial intermediaries, a lack of modern technology, the lack of a sufficient
capital base to expand business operations, and the possibility of permanent or
temporary termination of trading.
Settlement mechanisms in emerging securities markets may be less efficient and
reliable than in more developed markets. In such emerging securities markets
there may be share registration and delivery delays or failures.
Most Latin American countries have experienced substantial, and in some periods
extremely high, rates of inflation for many years. Inflation and rapid
fluctuations in inflation rates and corresponding currency devaluations have had
and may continue to have negative effects on the economies and securities
markets of certain Latin American countries.
- --------------------------------------------------------------------------------
INVESTMENT LIMITATIONS
- --------------------------------------------------------------------------------
The Fund has adopted the following investment limitations as fundamental
policies which (unless otherwise noted) may not be changed without approval by
the holders of the lesser of (i) 67% of the Fund's shares represented at a
meeting at which more than 50% of the outstanding shares are represented, and
(ii) more than 50% of the outstanding shares.
The Fund may not:
(1) Invest 25% or more of the value of its total assets in the
securities of issuers conducting their principal business activities in the
same industry, except that this limitation shall not apply to securities
issued or guaranteed as to principal and interest by the U.S. Government or
any of its agencies or instrumentalities;
(2) Buy or sell real estate (including real estate limited partnerships)
or commodities or commodity contracts; however, the Fund may invest in debt
securities secured by real estate or interests therein or issued by
companies which invest in real estate or interests therein, including real
estate investment trusts, and may purchase or sell currencies (including
forward currency exchange contracts), futures contracts and related options
generally as described in the Prospectus and Statement of Additional
Information;
(3) Engage in the business of underwriting securities of other issuers,
except to the extent that the disposal of an investment position may
technically cause it to be considered an underwriter as that term is defined
under the Securities Act of 1933;
(4) Make loans, except that the Fund may purchase debt securities and
enter into repurchase agreements and may make loans of portfolio securities;
(5) Purchase securities on margin, provided that the Fund may obtain
such short-term credits as may be necessary for the clearance of purchases
and sales of securities; except that it may make margin deposits in
connection with futures contracts;
(6) Borrow money except from banks for temporary or emergency purposes
not in excess of 33 1/3% of the value of the Fund's total assets (at the
lower of cost or fair market value). The Fund will not purchase securities
while borrowings (including reverse repurchase agreements) in excess of 5%
of its total assets are outstanding. This restriction shall not prevent the
Fund from entering into reverse repurchase agreements, provided that reverse
repurchase agreements, and any other transactions constituting borrowing by
the Fund may not exceed one-third of the Fund's total assets. In the event
that the asset coverage for the Fund's borrowings falls below 300%, the Fund
will reduce, within three days (excluding Sundays and holidays), the amount
of its borrowings in order to provide for 300% asset coverage;
(7) Mortgage, pledge, or hypothecate any of its assets, provided that
this restriction shall not apply to the transfer of securities in connection
with any permissible borrowing or to collateral arrangements in connection
with permissible activities;
(8) Invest in direct interests or leases in oil, gas, or other mineral
exploration or development programs; however, the Fund may invest in the
securities of companies that engage in these activities.
Statement of Additional Information Page 18
<PAGE>
G.T. LATIN AMERICA GROWTH FUND
For purposes of the Fund's concentration policy contained in limitation (1),
above, the Fund intends to comply with the SEC staff position that securities
issued or guaranteed as to principal and interest by any single foreign
government are considered to be securities of issuers in the same industry.
The following operating policies of the Fund are not fundamental policies of the
Fund and may be changed by vote of a majority of the Company's Board of
Directors without shareholder approval. The Fund may not:
(1) Invest in securities of an issuer if the investment would cause the
Fund to own more than 10% of any class of securities of any one issuer;
(2) Invest in companies for the purpose of exercising control or
management;
(3) Invest more than 10% of its total assets in illiquid securities,
including securities that are illiquid by virtue of the absence of a readily
available market;
(4) Invest more than 5% of its total assets in securities of companies
having, together with their predecessors, a record of less than three years
of continuous operation;
(5) Purchase or retain the securities of any issuer, if those individual
officers and Directors of the Company, the Fund's investment adviser, or
distributor, each owning beneficially more than 1/2 of 1% of the securities
of such issuer, together own more than 5% of the securities of such issuer;
or
(6) Enter into a futures contract, an option on a futures contract, or
an option on foreign currency traded on a CFTC-regulated exchange, in each
case other than for BONA FIDE hedging purposes (as defined by the CFTC), if
the aggregate initial margin and premiums required to establish all of those
positions (excluding the amount by which options are 'in-the-money") exceeds
5% of the liquidation value of the Fund's portfolio, after taking into
account unrealized profits and unrealized losses on any contracts the Fund
has entered into.
The Fund has the authority to invest up to 10% of its total assets in shares of
other investment companies pursuant to the 1940 Act. The Fund may not invest
more than 5% of its total assets in any one investment company or acquire more
than 3% of the outstanding voting securities of any one investment company.
Investors should refer to the Prospectus for further information with respect to
the Fund's investment objective, which may not be changed without the approval
of the shareholders, and other investment policies, techniques and limitations,
which may be changed without shareholder approval.
Statement of Additional Information Page 19
<PAGE>
G.T. LATIN AMERICA GROWTH FUND
EXECUTION OF PORTFOLIO
TRANSACTIONS
- --------------------------------------------------------------------------------
Subject to policies established by the Company's Board of Directors, G.T.
Capital is responsible for the execution of the Fund's portfolio transactions
and the selection of broker/dealers who execute such transactions on behalf of
the Fund. In executing portfolio transactions, G.T. Capital seeks the best net
results for the Fund, taking into account such factors as the price (including
the applicable brokerage commission or dealer spread), size of the order,
difficulty of execution and operational facilities of the firm involved. While
G.T. Capital generally seeks reasonably competitive commission rates and
spreads, payment of the lowest commission or spread is not necessarily
consistent with the best net results. While the Fund may engage in soft dollar
arrangements for research services, as described below, the Fund has no
obligation to deal with any broker/dealer or group of broker/dealers in the
execution of portfolio transactions.
Consistent with the interests of the Fund, G.T. Capital may select brokers to
execute the Fund's portfolio transactions on the basis of the research and
brokerage services they provide to G.T. Capital for its use in managing the Fund
and its other advisory accounts. Such services may include furnishing analyses,
reports and information concerning issuers, industries, securities, geographic
regions, economic factors and trends, portfolio strategy, and performance of
accounts; and effecting securities transactions and performing functions
incidental thereto (such as clearance and settlement). Research and brokerage
services received from such brokers are in addition to, and not in lieu of, the
services required to be performed by G.T. Capital under the Management Contract
(defined below). A commission paid to such broker/dealers may be higher than
that which another qualified broker would have charged for effecting the same
transaction, provided that G.T. Capital determines in good faith that such
commission is reasonable in terms either of that particular transaction or the
overall responsibility of G.T. Capital to the Fund and its other clients and
that the total commissions paid by the Fund will be reasonable in relation to
the benefits received by the Fund over the long term. Research services may also
be received from dealers who execute Fund transactions.
G.T. Capital may allocate brokerage transactions to broker/dealers who have
entered into arrangements under which the broker/dealer allocates a portion of
the commissions paid by the Fund toward payment of the Fund's expenses, such as
transfer agent and custodian fees.
Investment decisions for the Fund and for other investment accounts managed by
G.T. Capital are made independently of each other in light of differing
conditions. However, the same investment decision may occasionally be made for
two or more of such accounts including the Fund. In such cases, simultaneous
transactions may occur. Purchases or sales are then allocated as to price or
amount in a manner deemed fair and equitable to all accounts involved. While in
some cases this practice could have a detrimental effect upon the price or value
of the security as far as the Fund is concerned, in other cases G.T. Capital
believes that coordination and the ability to participate in volume transactions
will be beneficial to the Fund.
Under a policy adopted by the Company's Board of Directors, and subject to the
policy of obtaining the best net results, G.T. Capital may consider a
broker/dealer's sale of the shares of the Fund and the other funds for which
G.T. Capital serves as investment manager in selecting brokers and dealers for
the execution of portfolio transactions. This policy does not imply a commitment
to execute portfolio transactions through all broker/dealers that sell shares of
the Fund and such other funds.
The Fund contemplates purchasing most foreign equity securities in OTC markets
or stock exchanges located in the countries in which the respective principal
offices of the issuers of the various securities are located, if that is the
best available market. The fixed commissions paid in connection with most such
foreign stock transactions generally are higher than negotiated commissions on
United States transactions. There generally is less government supervision and
regulation of foreign stock exchanges and brokers than in the United States.
Foreign security settlements may in some instances be subject to delays and
related administrative uncertainties.
Foreign equity securities may be held by the Fund in the form of ADRs, ADSs,
EDRs, CDRs or securities convertible into foreign equity securities. ADRs, ADSs,
EDRs and CDRs may be listed on stock exchanges, or traded in the over-the-
counter markets in the United States or Europe, as the case may be. ADRs, like
other securities traded in the United States,
Statement of Additional Information Page 20
<PAGE>
G.T. LATIN AMERICA GROWTH FUND
will be subject to negotiated commission rates. The foreign and domestic debt
securities and money market instruments in which the Fund may invest are
generally traded in the over-the-counter markets.
The Fund contemplates that, consistent with the policy of obtaining the best net
results, brokerage transactions may be conducted through certain companies that
are members of the BIL GT Group. The Company's board of directors has adopted
procedures in conformity with Rule 17e-1 under the 1940 Act to ensure that all
brokerage commissions paid to such affiliates are reasonable and fair in the
context of the market in which they are operating. Any such transactions will be
effected and related compensation paid only in accordance with applicable SEC
regulations. For the Fund's fiscal years ended October 31, 1994, 1993 and 1992,
the Fund paid aggregate brokerage commissions of $708,799, $616,803 and
$1,284,114, respectively.
PORTFOLIO TURNOVER AND TRADING
The Fund engages in portfolio trading when G.T. Capital has concluded that the
sale of a security owned by the Fund and/ or the purchase of another security of
better value can enhance principal and/or increase income. A security may be
sold to avoid any prospective decline in market value, or a security may be
purchased in anticipation of a market rise. Consistent with the Fund's
investment objective, a security also may be sold and a comparable security
purchased coincidentally in order to take advantage of what is believed to be a
disparity in the normal yield and price relationship between the two securities.
Although the Fund does not intend generally to trade for short-term profits, the
securities in the Fund's portfolio will be sold whenever management believes it
is appropriate to do so, without regard to the length of time a particular
security may have been held. The Fund anticipates that its annual portfolio
turnover rate should not exceed 100%, but this expectation will not be a
limiting factor when G.T. Capital deems portfolio changes appropriate. A 100%
portfolio turnover rate would occur if the lesser of the value of purchases or
sales of portfolio securities for the Fund for a year (excluding purchases of
U.S. Treasury and other securities with a maturity at the date of purchase of
one year or less) were equal to 100% of the average monthly value of the
securities, excluding short-term investments, held by the Fund during such year.
Higher portfolio turnover involves correspondingly greater brokerage commissions
and other transaction costs that the Fund will bear directly. The Fund's
portfolio turnover rates for the fiscal years ended October 31, 1994 and 1993
were 155% and 112%, respectively.
Statement of Additional Information Page 21
<PAGE>
G.T. LATIN AMERICA GROWTH FUND
DIRECTORS AND EXECUTIVE
OFFICERS
- --------------------------------------------------------------------------------
The Company's By-laws authorize a Board of Directors of between 1 and 25
persons, as fixed by the Board of Directors. Directors normally are elected by
shareholders; however, a majority of remaining Directors may fill Director
vacancies caused by resignation, death or expansion of the Board. The Company's
Directors and Executive Officers are listed below.
<TABLE>
<CAPTION>
NAME, POSITION(S) WITH THE PRINCIPAL OCCUPATIONS AND BUSINESS
COMPANY AND ADDRESS EXPERIENCE FOR PAST 5 YEARS
- --------------------------------------- ------------------------------------------------------------------------------------------
<S> <C>
David A. Minella*, 42 Director of BIL G.T. Group Limited (holding company of the various international G.T.
Director, Chairman of the Board and companies) since 1990; Director and President of G.T. Capital since 1989; Director and
President President of G.T. Global since 1987; and Director and President of G.T. Services since
50 California St. 1990. Mr. Minella also is a director or trustee of each of the other investment companies
San Francisco, CA 94111 registered under the 1940 Act that is managed or administered by G.T. Capital.
C. Derek Anderson, 53 Chairman, Anderson Capital Management, Inc. from 1988 to present; Chairman, Plantagenet
Director Holdings, Ltd. from 1991 to present; Director, Munsingwear, Inc.; Director, American
220 Sansome Street Heritage Group Inc.; Director, T.L. Higgins Inc. and various other companies. Mr. Anderson
Suite 400 also is a director or trustee of each of the other investment companies registered under
San Francisco, CA 94104 the 1940 Act that is managed or administered by G.T. Capital.
Frank S. Bayley, 55 A Partner with Baker & McKenzie (a law firm) and serves as Director and Chairman of C.D.
Director Stinson Company (a private investment company); Trustee, Seattle Art Museum. Mr. Bayley
2 Embarcadero Center also is a director or trustee of each of the other investment companies registered under
San Francisco, CA 94118 the 1940 Act that is managed or administered by G.T. Capital.
Arthur C. Patterson, 52 Managing Partner of Accel Partners (a venture capital firm). Mr. Patterson also serves as
Director a director of various computing and software companies. Mr. Patterson also is a director
One Embarcadero Center or trustee of each of the other investment companies registered under the 1940 Act that is
Suite 3820 managed or administered by G.T. Capital.
San Francisco, CA 94111
Ruth H. Quigley, 59 Private investor. From 1984 to 1986, Miss Quigley was President of Quigley Friedlander &
Director Co., Inc. (a financial advisory services firm). Ms. Quigley also is a director or trustee
1055 California Street of each of the other investment companies registered under the 1940 Act that is managed or
San Francisco, CA 94108 administered by G.T. Capital.
F. Christian Wignall, 39 Senior Vice President, Chief Investment Officer - Global Equities and a Director of G.T.
Vice President and Chief Investment Capital since 1987, and Chairman of the Investment Policy Committee of the affiliated
Officer - international G.T. companies since 1990.
Global Equities
50 California Street
San Francisco, CA 94111
Gary Kreps, 40 Senior Vice President and Chief Investment Officer - Global Fixed Income of G.T. Capital
Vice President and Chief Investment and a Director since 1992. Prior to joining G.T. Capital, Mr. Kreps was Senior Vice
Officer - Global President of the Putnam Companies from 1988 to 1992.
Fixed Income
50 California Street
San Francisco, CA 94111
</TABLE>
Statement of Additional Information Page 22
<PAGE>
G.T. LATIN AMERICA GROWTH FUND
<TABLE>
<CAPTION>
NAME, POSITION(S) WITH THE PRINCIPAL OCCUPATIONS AND BUSINESS
COMPANY AND ADDRESS EXPERIENCE FOR PAST 5 YEARS
- --------------------------------------- ------------------------------------------------------------------------------------------
Helge K. Lee, 48 Senior Vice President, General Counsel and Secretary of G.T. Capital, G.T. Global and G.T.
Vice President and Secretary Services since May, 1994. Mr. Lee was the Senior Vice President, General Counsel and
50 California Street Secretary of Strong/Corneliuson Management, Inc. and Secretary of each of the Strong Funds
San Francisco, CA 94111 from October, 1991 through May, 1994. For more than five years prior to October, 1991, he
was a shareholder in the law firm of Godfrey & Kahn, S.C., Milwaukee, Wisconsin.
<S> <C>
James R. Tufts, 37 Senior Vice President - Finance and Administration of G.T. Capital, G.T. Global and G.T.
Vice President and Chief Services since 1994. Prior thereto, Mr. Tufts was Vice President - Finance of G.T. Capital
Financial Officer and G.T. Global since 1987; Vice President - Finance of G.T. Services since 1990; and a
50 California Street Director of G.T. Capital, G.T. Global and G.T. Services since 1991.
San Francisco, CA 94111
Kenneth W. Chancey, 50 Vice President of G.T. Capital and G.T. Global since 1992. Mr. Chancey was Vice President
Vice President and of Putnam Fiduciary Trust Company from 1989 to 1992.
Chief Accounting Officer
50 California Street
San Francisco, CA 94111
Peter R. Guarino, 36 Assistant General Counsel of G.T. Capital, G.T. Global and G.T. Services since 1991. From
Assistant Secretary 1989 to 1991, Mr. Guarino was an attorney at The Dreyfus Corporation. Prior thereto, he
50 California Street was associated with Colonial Management Associates, Inc.
San Francisco, CA 94111
David J. Thelander, 39 Assistant General Counsel of G.T. Capital since January 1995. From 1993 to 1994, Mr.
Assistant Secretary Thelander was an associate at Kirkpatrick & Lockhart LLP (a law firm). Prior thereto, he
50 California Street was an attorney with the U.S. Securities and Exchange Commission.
San Francisco, CA 94111
<FN>
- --------------
* Mr. Minella is an "interested person" of the Company as defined by the 1940
Act due to his affiliation with the G.T. companies.
</TABLE>
The Board of Directors has a Nominating and Audit Committee, comprised of Miss
Quigley and Messrs. Anderson, Bayley and Patterson, which is responsible for
nominating persons to serve as Directors, reviewing audits of the Company and
its funds and recommending firms to serve as independent auditors for the
Company. Each of the Directors and officers of the Company is also a Director
and officer of G.T. Investment Portfolios, Inc. and G.T. Global Developing
Markets Fund, Inc., a Trustee and officer of G.T. Global Growth Series and a
Trustee of G.T. Greater Europe Fund, G.T. Global Variable Investment Trust, G.T.
Global Variable Investment Series, Global High Income Portfolio and Global
Investment Portfolio, which are also registered investment companies managed by
G.T. Capital. Each Director and Officer serves in total as a Director and or
Trustee and Officer, respectively, of 9 registered investment companies with 38
Series funds managed or administered by G.T. Capital. The Company pays each
Director, who is not a director, officer or employee of G.T. Capital or any
affiliated company, $5,000 per annum, plus $300 per Fund for each meeting of the
Board attended, and reimburses travel and other expenses incurred in connection
with attendance at such meetings. Other Directors and officers receive no
compensation or expense reimbursement from the Company. For the fiscal year
ended December 31, 1994, the Company paid Mr. Anderson, Mr. Bayley, Mr.
Patterson and Ms. Quigley received Directors' fees and expense reimbursements of
$37,114, $39,425, $31,941 and $33,178, respectively. For the year ended October
31, 1994, Mr. Anderson, Mr. Bayley, Mr. Patterson and Ms. Quigley who are not
directors, officers or employees of G.T. Capital or any affiliated company, each
received total compensation of $94,511, $99,529, $82,742 and $86,914,
respectively, from the 38 G.T. Funds for which he or she serves as a Director or
Trustee. Fees and expenses disbursed to the Directors contained no accrued or
payable pension or retirement benefits. As of the date of this Statement of
Additional Information, the officers and Directors and their families as a group
owned in the aggregate beneficially or of record less than 1% of the outstanding
shares of the Fund or of all the Company's funds in the aggregate.
Statement of Additional Information Page 23
<PAGE>
G.T. LATIN AMERICA GROWTH FUND
MANAGEMENT
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INVESTMENT MANAGEMENT AND ADMINISTRATION
G.T. Capital serves as the Fund's investment manager and administrator under an
Investment Management and Administration Contract ("Management Contract")
between the Company and G.T. Capital. As investment manager and administrator,
G.T. Capital makes all investment decisions for the Fund and administers the
Fund's affairs. Among other things, G.T. Capital furnishes the services and pays
the compensation and travel expenses of persons who perform the executive,
administrative, clerical and bookkeeping functions of the Company and the Fund,
and provides suitable office space, necessary small office equipment and
utilities.
The Management Contract has an initial two-year term with respect to the Fund
from the date of the commencement of Fund operations, and may be renewed for
additional one-year terms thereafter with respect to the Fund, provided that any
such renewal has been specifically approved at least annually by: (i) the
Company's Board of Directors, or by the vote of a majority of the Fund's
outstanding voting securities (as defined in the 1940 Act), and (ii) a majority
of Directors who are not parties to the Management Contract or "interested
persons" of any such party (as defined in the 1940 Act), cast in person at a
meeting called for the specific purpose of voting on such approval. The
Management Contract was approved with respect to the Fund by the vote of the
Board of Directors of the Company on June 15, 1994. The Management Contract
provides that with respect to the Fund either the Company or G.T. Capital may
terminate the Contract without penalty upon sixty (60) days' written notice. The
Management Contract terminates automatically in the event of its assignment (as
defined in the 1940 Act).
Under the Management Contract, G.T. Capital has agreed to reimburse the Fund if
the Fund's annual ordinary expenses exceed the most stringent expense
limitations prescribed by any state in which the Fund's shares are offered for
sale. Currently, the most restrictive applicable limitation provides that the
Fund's expenses may not exceed an annual rate of 2 1/2% of the first $30 million
of average net assets, 2% of the next $70 million of average net assets and
1 1/2% of assets in excess of that amount. Expenses which are not subject to
this limitation are interest, taxes, the amortization of organizational
expenses, payments of distribution fees, in part, and extraordinary expenses.
G.T. Capital and G.T. Global have undertaken to limit the Fund's Advisor Class
share expenses to 1.90% of average daily net assets of the Advisor Class shares,
and G.T. Capital has agreed to reimburse the Fund if the Fund's annual ordinary
expenses exceed 1.90% of average daily net assets of Fund's Advisor Class shares
(exclusive of brokerage commissions, interest, taxes, certain expenses
attributable to investing outside the U.S. and extraordinary expenses).
For the fiscal year ended October 31, 1994, the Fund paid management and
administration fees in the amount of $3,601,301 to G.T. Capital. Management and
administration fees in the amount of $1,013,499 were paid to G.T. Capital by the
Fund for the fiscal year ended October 31, 1993. However, during that period
G.T. Capital reimbursed fees of $93,920 to the Fund, with a net payment to G.T.
Capital of $920,579. Similarly, $1,348,499 were paid to G.T. Capital by the Fund
for the fiscal year ended October 31, 1992. During this period G.T. Capital
reimbursed fees of $302,329 to the Fund with a net payment to G.T. Capital of
$1,046,170. For the fiscal period August 13, 1991 (commencement of operations)
to October 31, 1991, the Fund paid management and administration fees of $87,137
to G.T. Capital. However, during that period G.T. Capital reimbursed fees of
$88,797 to the Fund, with a payment to G.T. Capital of $1,660.
Certain Latin American countries require a local entity to provide
administrative services for all direct investments by foreigners. Where required
by local law, the Fund intends to retain a local entity to provide such
administrative services. The local administrator will be paid a fee by the Fund
for its services.
DISTRIBUTION
The Fund's Advisor Class shares are continuously offered through the Fund's
principal underwriter and Distributor, G.T. Global, on a "best efforts" basis
without a sales charge or a contingent deferred sales charge.
Statement of Additional Information Page 24
<PAGE>
G.T. LATIN AMERICA GROWTH FUND
TRANSFER AGENCY SERVICES
G.T. Global Investor Services, Inc. ("Transfer Agent") has been retained by the
Fund to perform shareholder servicing, reporting and general transfer agent
functions for the Fund. For these services, the Transfer Agent receives an
annual maintenance fee of $17.50 per account, a new account fee of $4.00 per
account, a per transaction fee of $1.75 for all transactions other than
exchanges and a per exchange fee of $2.25. The Transfer Agent is also reimbursed
by the Fund for its out-of-pocket expenses for such items as postage, forms,
telephone charges, stationary and office supplies.
EXPENSES OF THE FUND
The Fund pays all expenses not assumed by G.T. Capital, G.T. Global and other
agents. These expenses include, in addition to the advisory, distribution and
brokerage fees discussed above, legal and audit expenses, custodian and transfer
agency fees, directors' fees, organizational fees, fidelity bond and other
insurance premiums, taxes, extraordinary expenses and the expenses of reports
and prospectuses sent to existing investors. The allocation of general Company
expenses and expenses shared by the Fund and other funds organized as series of
the Company with one another are allocated on a basis deemed fair and equitable,
which may be based on the relative net assets of the Fund or the nature of the
services performed and relative applicability to the Fund. Expenditures,
including costs incurred in connection with the purchase or sale of portfolio
securities, which are capitalized in accordance with generally accepted
accounting principles applicable to investment companies, are accounted for as
capital items and not as expenses. The ratio of the Fund's expenses to its
relative net assets can be expected to be higher than the expense ratios of
funds investing solely in domestic securities, since the cost of maintaining the
custody of foreign securities and the rate of investment management fees paid by
the Fund generally are higher than the comparable expenses of such other funds.
- --------------------------------------------------------------------------------
VALUATION OF SHARES
- --------------------------------------------------------------------------------
As described in the Prospectus, the Fund's net asset value per share for each
class of shares is determined at the close of normal trading on The New York
Stock Exchange, Inc. ("NYSE") (currently 4:00 p.m. Eastern time) (unless
weather, equipment failure or other factors contribute to an earlier closing
time) on each day for which the NYSE is open for business. Currently, the NYSE
is closed on weekends and on certain days relating to the following holidays:
New Year's Day, Presidents' Day, Good Friday, Memorial Day, July 4th, Labor Day,
Thanksgiving Day and Christmas Day.
The Fund's portfolio securities and other assets are valued as follows:
Equity securities, including ADRs, ADSs and EDRs, which are traded on stock
exchanges are valued at the last sale price on the exchange on which such
securities are traded, as of the close of business on the day the securities are
being valued or, lacking any sales, at the last available bid price. In cases
where securities are traded on more than one exchange, the securities are valued
on the exchange determined by G.T. Capital to be the primary market. Securities
traded in the over-the-counter market are valued at the last available bid price
prior to the time of valuation. Securities and assets for which market
quotations are not readily available (including restricted securities which are
subject to limitations as to their sale) are valued at fair value as determined
in good faith by or under the direction of the Board of Directors.
Long-term debt obligations are valued at the mean of representative quoted bid
and asked prices for such securities or, if such prices are not available, at
prices for securities of comparable maturity, quality and type; however, when
G.T. Capital deems it appropriate, prices obtained for the day of valuation from
a bond pricing service will be used. Short-term debt investments are amortized
to maturity based on their cost, adjusted for foreign exchange translation,
provided such valuations represent fair value.
Options on indices, securities and currencies purchased by the Fund are valued
at their last bid price in the case of listed options or at the average of the
last bid prices obtained from dealers in the case of OTC options. The value of
each security denominated in a currency other than U.S. dollars will be
translated into U.S. dollars at the prevailing exchange rate as determined by
G.T. Capital on that day. When market quotations for futures and options on
futures held by the Fund are readily available, those positions will be valued
based upon such quotations.
Securities and other assets for which market quotations are not readily
available are valued at fair value as determined in good faith by or under the
direction of the Company's Board of Directors. The valuation procedures applied
in any specific instance are likely to vary from case to case. However,
consideration is generally given to the financial position of
Statement of Additional Information Page 25
<PAGE>
G.T. LATIN AMERICA GROWTH FUND
the issuer and other fundamental analytical data relating to the investment and
to the nature of the restrictions on disposition of the securities (including
any registration expenses that might be borne by the Fund in connection with
such disposition). In addition, specific factors are also generally considered,
such as the cost of the investment, the market value of any unrestricted
securities of the same class (both at the time of purchase and at the time of
valuation), the size of the holding, the prices of any recent transactions or
offers with respect to such securities and any available analysts' reports
regarding the issuer.
The fair value of any other assets is added to the value of all securities
positions to arrive at the value of the Fund's total assets. The Fund's
liabilities, including accruals for expenses, are deducted from its total
assets. Once the total value of the Fund's net assets is so determined, that
value is then divided by the total number of shares outstanding (excluding
treasury shares), and the result, rounded to the nearer cent, is the net asset
value per share.
Any assets or liabilities initially denominated in terms of foreign currencies
are translated into U.S. dollars at the official exchange rate or at the mean of
the current bid and asked prices of such currencies against the U.S. dollar last
quoted by a major bank that is a regular participant in the foreign exchange
market or on the basis of a pricing service that takes into account the quotes
provided by a number of such major banks. If none of these alternatives are
available or none are deemed to provide a suitable methodology for converting a
foreign currency into U.S. dollars, the Board of Directors in good faith will
establish a conversion rate for such currency.
Latin American securities trading may not take place on all days on which the
NYSE is open. Further, trading takes place in various foreign markets on days on
which the NYSE is not open. Consequently, the calculation of the Fund's net
asset value may not take place contemporaneously with the determination of the
prices of securities held by the Fund. Events affecting the values of portfolio
securities that occur between the time their prices are determined and the close
of regular trading on the NYSE will not be reflected in the Fund's net asset
value unless G.T. Capital, under the supervision of the Company's Board of
Directors, determines that the particular event would materially affect net
asset value. As a result, the Fund's net asset value may be significantly
affected by such trading on days when a shareholder cannot purchase or redeem
shares of the Fund.
- --------------------------------------------------------------------------------
INFORMATION RELATING TO SALES AND
REDEMPTIONS
- --------------------------------------------------------------------------------
PAYMENT AND TERMS OF OFFERING
Payment for Advisor Class shares purchased should accompany the purchase order,
or funds should be wired to the Transfer Agent as described in the Prospectus.
Payment, other than by wire transfer, must be made by check or money order drawn
on a U.S. bank. Checks or money orders must be payable in U.S. dollars.
As a condition of this offering, if an order to purchase either class of shares
is cancelled due to nonpayment (for example, because a check is returned for
"not sufficient funds"), the person who made the order will be responsible for
any loss incurred by the Fund by reason of such cancellation, and if such
purchaser is a shareholder, the Fund shall have the authority as agent of the
shareholder to redeem shares in his or her account at their then-current net
asset value per share to reimburse the Fund for the loss incurred. Investors
whose purchase orders have been cancelled due to nonpayment may be prohibited
from placing future orders.
The Fund reserves the right at any time to waive or increase the minimum
requirements applicable to initial or subsequent investments with respect to any
person or class of persons. An order to purchase shares is not binding on the
Fund until it has been confirmed in writing by the Transfer Agent (or other
arrangements made with the Fund, in the case of orders utilizing wire transfer
of funds, as described above) and payment has been received. To protect existing
shareholders, the Fund reserves the right to reject any offer for a purchase of
shares by any individual.
SALES OUTSIDE THE UNITED STATES
Sales of Fund shares made through brokers outside the United States will be at
net asset value plus a sales commission, if any, established by that broker or
by local law; such a commission, if any, may be more or less than the sales
charges listed in the sales charge table included in the Prospectus.
Statement of Additional Information Page 26
<PAGE>
G.T. LATIN AMERICA GROWTH FUND
EXCHANGES BETWEEN FUNDS
A shareholder may exchange shares of the Fund for shares of other G.T. Global
Mutual Funds, based on their respective net asset values without imposition of
any sales charges provided the registration remains identical. The exchange
privilege is not an option or right to purchase shares but is permitted under
the current policies of the respective G.T. Global Mutual Funds. The privilege
may be discontinued or changed at any time by any of the funds upon 60 days'
written notice to the shareholders of such fund and is available only in states
where the exchange may be legally made. Advisor Class shares may be exchanged
only for Advisor Class shares of other G.T. Global Mutual Funds. Before
purchasing shares through the exercise of the exchange privilege, a shareholder
should obtain and read a copy of the prospectus of the fund to be purchased and
should consider the investment objectives of the fund.
TELEPHONE REDEMPTIONS
A corporation or partnership wishing to utilize telephone redemption services
must submit a "Corporate Resolution" or "Certificate of Partnership" indicating
the names, titles and the required number of signatures of persons authorized to
act on its behalf. The certificate must be signed by a duly authorized
officer(s), and, in the case of a corporation, the corporate seal must be
affixed. All shareholders may request that redemption proceeds be transmitted by
bank wire upon request directly to the shareholder's predesignated account at a
domestic bank or savings institution if the proceeds are at least $1,000. Costs
in connection with the administration of this service, including wire charges,
will be borne by the Fund. Proceeds of less than $1,000 will be mailed to the
shareholder's registered address of record. The Fund and the Transfer Agent
reserve the right to refuse any telephone instructions and may discontinue the
aforementioned redemption options upon 30 days' written notice.
SUSPENSION OF REDEMPTION PRIVILEGES
The Fund may suspend redemption privileges or postpone the date of payment for
more than seven days after a redemption order is received during any period (1)
when the NYSE is closed other than customary weekend and holiday closings, or
trading on the NYSE is restricted as determined by the SEC, (2) when an
emergency exists, as defined by the SEC, which makes it not reasonably
practicable for the Fund to dispose of securities owned by it or fairly to
determine the value of their assets, or (3) as the SEC may otherwise permit.
REDEMPTIONS IN KIND
It is possible that conditions may arise in the future which would, in the
opinion of the Company's Board of Directors, make it undesirable for the Fund to
pay for all redemptions in cash. In such cases, the Board may authorize payment
to be made in portfolio securities or other property of the Fund, so called
"redemptions in kind." Payment of redemptions in kind will be made in readily
marketed securities. Such securities would be valued at the same value assigned
to them in computing the net asset value per share. Shareholders receiving such
securities would incur brokerage costs in selling any such securities so
received. However, despite the foregoing, the Company has filed with the SEC an
election pursuant to Rule 18f-1 under the 1940 Act. This means that the Fund
will pay in cash all requests for redemption made by any shareholder of record,
limited in amount with respect to each shareholder during any ninety-day period
to the lesser of $250,000 or 1% of the value of the net assets of the Fund at
the beginning of such period. This election will be irrevocable so long as Rule
18f-1 remains in effect, unless the SEC by order upon application permits the
withdrawal of such election.
Statement of Additional Information Page 27
<PAGE>
G.T. LATIN AMERICA GROWTH FUND
TAXES
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GENERAL
In order to continue to qualify for treatment as a regulated investment company
("RIC") under the Internal Revenue Code of 1986, as amended ("Code"), the Fund
must distribute to its shareholders for each taxable year at least 90% of its
investment company taxable income (consisting generally of net investment
income, net short-term capital gain and net gains from certain foreign currency
transactions) ("Distribution Requirement") and must meet several additional
requirements. These requirements include the following: (1) the Fund must derive
at least 90% of its gross income each taxable year from dividends, interest,
payments with respect to securities loans and gains from the sale or other
disposition of securities or foreign currencies, or other income (including
gains from options, Futures or Forward Contracts) derived with respect to its
business of investing in securities or those currencies ("Income Requirement");
(2) the Fund must derive less than 30% of its gross income each taxable year
from the sale or other disposition of securities, or any of the following, that
were held for less than three months -- options or Futures (other than those on
foreign currencies), or foreign currencies (or options, Futures or Forward
Contracts thereon) that are not directly related to the Fund's principal
business of investing in securities (or options and Futures with respect to
securities) ("Short-Short Limitation"); (3) at the close of each quarter of the
Fund's taxable year, at least 50% of the value of its total assets must be
represented by cash and cash items, U.S. government securities, securities of
other RICs and other securities, with these other securities limited, in respect
of any one issuer, to an amount that does not exceed 5% of the value of the
Fund's total assets and that does not represent more than 10% of the issuer's
outstanding voting securities; and (4) at the close of each quarter of the
Fund's taxable year, not more than 25% of the value of its total assets may be
invested in securities (other than U.S. government securities or the securities
of other RICs) of any one issuer.
Dividends and other distributions declared by the Fund in, and payable to
shareholders of record as of a date in, October, November or December of any
year will be deemed to have been paid by the Fund and received by the
shareholders on December 31 of that year if the distributions are paid by the
Fund during the following January. Accordingly, those distributions will be
taxed to shareholders for the year in which that December 31 falls.
A portion of the dividends from the Fund's investment company taxable income
(whether paid in cash or reinvested in additional shares) may be eligible for
the dividends-received deduction allowed to corporations. The eligible portion
may not exceed the aggregate dividends received by the Fund from U.S.
corporations. However, dividends received by a corporate shareholder and
deducted by it pursuant to the dividends-received deduction are subject
indirectly to the alternative minimum tax.
If Fund shares are sold at a loss after being held for six months or less, the
loss will be treated as long-term, instead of short-term, capital loss to the
extent of any capital gain distributions received on those shares. Investors
also should be aware that if shares are purchased shortly before the record date
for any dividend or other distribution, the shareholder will pay full price for
the shares and receive some portion of the price back as a taxable distribution.
The Fund will be subject to a nondeductible 4% excise tax ("Excise Tax") to the
extent it fails to distribute by the end of any calendar year substantially all
of its ordinary income for that year and capital gain net income for the
one-year period ending on October 31 of that year, plus certain other amounts.
FOREIGN TAXES
Dividends and interest received by the Fund may be subject to income,
withholding, or other taxes imposed by foreign countries and U.S. possessions
that would reduce the yield on its securities. Tax conventions between certain
countries and the United States may reduce or eliminate these foreign taxes,
however, and many foreign countries do not impose taxes on capital gains in
respect of investments by foreign investors. If more than 50% of the value of
the Fund's total assets at the close of its taxable year consists of securities
of foreign corporations, the Fund will be eligible to, and may, file an election
with the Internal Revenue Service that will enable its shareholders, in effect,
to receive the benefit of the foreign tax credit with respect to any foreign
income taxes paid by it. Pursuant to the election, the Fund will treat those
taxes as dividends paid to its shareholders and each shareholder will be
required to (1) include in gross income, and treat as paid by him, his
proportionate share of those taxes, (2) treat his share of those taxes and of
any dividend paid by the Fund that
Statement of Additional Information Page 28
<PAGE>
G.T. LATIN AMERICA GROWTH FUND
represents income from foreign sources as his own income from those sources, and
(3) either deduct the taxes deemed paid by him in computing his taxable income
or, alternatively, use the foregoing information in calculating the foreign tax
credit against his federal income tax. The Fund will report to its shareholders
shortly after each taxable year their respective shares of the Fund's income
from sources within, and taxes paid to, foreign countries if it makes this
election.
PASSIVE FOREIGN INVESTMENT COMPANIES
The Fund may invest in the stock of "passive foreign investment companies"
("PFICs"). A PFIC is a foreign corporation that, in general, meets either of the
following tests: (1) at least 75% of its gross income is passive or (2) an
average of at least 50% of its assets produce, or are held for the production
of, passive income. Under certain circumstances, the Fund would be subject to
federal income tax on a portion of any "excess distribution" received on, or of
any gain from disposition of, stock of a PFIC (collectively "PFIC income"), plus
interest thereon, even if the Fund distributed the PFIC income as a taxable
dividend to its shareholders. The balance of the PFIC income would be included
in the Fund's investment company taxable income and, accordingly, would not be
taxable to the Fund to the extent that income is distributed to its
shareholders.
If the Fund does invest in a PFIC and elects to treat the PFIC as a "qualified
electing fund" ("QEF"), then in lieu of the foregoing tax and interest
obligation, the Fund would be required to include in income each taxable year
its pro rata share of the QEF's ordinary earnings and net capital gain (the
excess of net long-term capital gain over net short-term capital loss) -- which
most likely would have to be distributed to satisfy the Distribution Requirement
and to avoid imposition of the Excise-Tax -- even if those earnings and gain
were not received by the Fund. In most instances it will be very difficult, if
not impossible, to make this election because of certain requirements thereof.
The "Tax Simplificiation and Technical Corrections Bill of 1993," passed in May
1994 by the House of Representatives, would substantially modify the taxation of
U.S. shareholders of foreign corporations, including eliminating the provisions
described above dealing with PFICs and replacing them (and other provisions)
with a regulatory scheme involving entities called "passive foreign
corporations." Three similar bills were passed by Congress in 1991 and 1992 and
vetoed. It is unclear at this time whether, and in what form, the proposed
modifications may be enacted into law.
Pursuant to proposed regulations, open-end RICs, such as the Fund, would be
entitled to elect to "mark-to-market" their stock in certain PFICs.
"Marking-to-market," in this context, means recognizing as gain for each taxable
year the excess, as of the end of that year, of the fair market value of each
such PFIC's stock over the adjusted basis in that stock (including
mark-to-market gain for each prior year for which an election was in effect).
NON-U.S. SHAREHOLDERS
Dividends paid by the Fund to a shareholder who, as to the United States, is a
nonresident alien individual, nonresident alien fiduciary of a trust or estate,
foreign corporation or foreign partnership ("foreign shareholder") will be
subject to U.S. withholding tax (at a rate of 30% or lower treaty rate).
Withholding will not apply if a dividend paid by the Fund to a foreign
shareholder is "effectively connected with the conduct of a U.S. trade or
business," in which case the reporting and withholding requirements applicable
to domestic shareholders will apply. Distributions of net capital gain are not
subject to withholding, but in the case of a foreign shareholder who is a
nonresident alien individual, those distributions ordinarily will be subject to
U.S. income tax at a rate of 30% (or lower treaty rate) if the individual is
physically present in the United States for more than 182 days during the
taxable year and the distributions are attributable to a fixed place of business
maintained by the individual in the United States.
OPTIONS, FUTURES AND FOREIGN CURRENCY TRANSACTIONS
The use of hedging transactions, such as selling (writing) and purchasing
options and Futures Contracts and entering into Forward Contracts, involves
complex rules that will determine, for federal income tax purposes, the
character and timing of recognition of the gains and losses the Fund realizes in
connection therewith. Income from foreign currencies (except certain gains
therefrom that may be excluded by future regulations), and income from
transactions in options, Futures and Forward Contracts derived by the Fund with
respect to its business of investing in securities or foreign currencies will
qualify as permissible income under the Income Requirement. However, income from
the disposition by the Fund of options and Futures (other than those on foreign
currencies) will be subject to the Short-Short Limitation if they are held for
less than three months. Income from the disposition by the Fund of foreign
currencies, and options, Futures and Forward Contracts on foreign currencies,
that are not directly related to the Fund's principal business of investing in
securities (or options and Futures with respect thereto) also will be subject to
the Short-Short Limitation if they are held for less than three months.
If the Fund satisfies certain requirements, any increase in value of a position
that is part of a "designated hedge" will be offset by any decrease in value
(whether realized or not) of the offsetting hedging position during the period
of the hedge
Statement of Additional Information Page 29
<PAGE>
G.T. LATIN AMERICA GROWTH FUND
for purposes of determining whether the Fund satisfies the Short-Short
Limitation. Thus, only the net gain (if any) from the designated hedge will be
included in gross income for purposes of that limitation. The Fund intends that,
when it engages in hedging transactions, it will qualify for this treatment, but
at the present time it is not clear whether this treatment will be available for
all those transactions. To the extent this treatment is not available, the Fund
may be forced to defer the closing out of certain options, Futures, Forward
Contracts or foreign currency positions beyond the time when it otherwise would
be advantageous to do so, in order for the Fund to continue to qualify as a RIC.
Futures and Forward Contracts that are subject to section 1256 of the Code
(other than those that are part of a "mixed straddle") ("Section 1256
Contracts") and that are held by the Fund at the end of its taxable year
generally will be deemed to have been sold at market value for federal income
tax purposes. Sixty percent of any net gain or loss recognized on these deemed
sales, and 60% of any net gain or loss realized from any actual sales of Section
1256 Contracts, will be treated as long-term capital gain or loss, and the
balance will be treated as short-term capital gain or loss. Section 988 of the
Code also may apply to gains and losses from transactions in foreign currencies,
foreign-currency-denominated debt securities and options, Futures and Forward
Contracts on foreign currencies. Each section 988 gain or loss generally is
computed separately and treated as ordinary income or loss. In the case of
overlap between sections 1256 and 988, special provisions determine the
character and timing of any income, gain or loss. The Fund attempts to monitor
section 988 transactions to minimize any adverse tax impact.
The foregoing is a general and abbreviated summary of certain federal income tax
considerations affecting the Fund and its shareholders. Investors are urged to
consult their own tax advisers for more detailed information and for information
regarding any foreign, state and local taxes applicable to distributions
received from the Fund.
Statement of Additional Information Page 30
<PAGE>
G.T. LATIN AMERICA GROWTH FUND
ADDITIONAL INFORMATION
- --------------------------------------------------------------------------------
BIL GT GROUP
Other subsidiaries of the BIL GT Group include the Bank in Liechtenstein AG, an
international financial services institution founded in 1920, with over $17
billion in assets under administration and principal offices in Vaduz,
Liechtenstein, Bank in Liechtenstein (Frankfurt) GmbH, and Bilfinanz und
Verwaltung AG located in Zurich, Switzerland. In total, BIL GT Group encompasses
over $43 billion in assets under management and administration.
CUSTODIAN
State Street Bank and Trust Company ("State Street"), 225 Franklin Street,
Boston, Massachusetts 02110, acts as custodian of the Fund's assets. State
Street is authorized to establish and has established separate accounts in
foreign currencies and to cause securities of the Fund to be held in separate
accounts outside the United States in the custody of non-U.S. banks.
INDEPENDENT ACCOUNTANTS
The Funds' independent accountants are Coopers & Lybrand L.L.P., One Post Office
Square, Boston, Massachusetts 02109. Coopers & Lybrand L.L.P., will conduct an
annual audit of the Fund, assists in the preparation of the Fund's federal and
state income tax returns and consults with the Company and the Fund as to
matters of accounting, regulatory filings, and federal and state income
taxation.
The audited financial statements of the Company included in this Statement of
Additional Information have been examined by Coopers & Lybrand L.L.P., as stated
in their opinion appearing herein and are included in reliance upon such opinion
given upon the authority of said firm as experts in accounting and auditing.
USE OF NAME
G.T. Capital has granted the Company the right to use the "G.T." name and has
reserved the right to withdraw its consent to the use of such name by the
Company and/or the Fund at any time, or to grant the use of such name to any
other company.
- --------------------------------------------------------------------------------
INVESTMENT RESULTS
- --------------------------------------------------------------------------------
The Fund's "Standardized Return", as referred to in the Prospectus (see
"Performance Information"), is calculated separately for Class A and Class B
shares of the Fund, as follows: Standardized Return ("T") is computed by using
the value at the end of the period ("EV") of a hypothetical initial investment
of $1,000 ("P") over a period of years ("n") according to the following formula
as required by the SEC: P(1+T) to the (n)th power = EV. The following
assumptions will be reflected in computations made in accordance with this
formula: (1) for Class A shares deduction of the maximum sales charge of 4.75%
from the $1,000 initial investment; (2) for Class B shares, deduction of the
applicable contingent deferred sales charge imposed or a redemption of Class B
shares held for the period; (3) reinvestment of dividends and other
distributions at net asset value on the reinvestment date determined by the
Board; and (4) a complete redemption at the end of any period illustrated. The
Fund's Standardized Return for its Class A shares stated as average annualized
total returns, at October 31, 1994, were as follows:
<TABLE>
<CAPTION>
PERIOD STANDARDIZED RETURN
- ------------------------------------------------------------------------------------------------------ -------------------
<S> <C>
Year ended October 31, 1994........................................................................... 27.72%
August 13, 1991 (commencement of operations) to October 31, 1994...................................... 22.57%
</TABLE>
Statement of Additional Information Page 31
<PAGE>
G.T. LATIN AMERICA GROWTH FUND
The Fund's Standardized Returns for its Class B shares which were first offered
on April 1, 1993, stated as average annual total returns, for the periods shown,
were:
<TABLE>
<CAPTION>
PERIOD STANDARDIZED RETURN
- ------------------------------------------------------------------------------------------------------ -------------------
<S> <C>
Year ended October 31, 1994........................................................................... 28.33%
April 1, 1993 through October 31, 1994................................................................ 33.46%
</TABLE>
"Non-Standardized Return," as referred to in the Prospectus, is calculated for a
specified period of time by assuming the investment of $1,000 in Fund shares and
further assuming the reinvestment of all dividends and other distributions made
to Fund shareholders in additional Fund shares at their net asset value.
Percentage rates of return are then calculated by comparing this assumed initial
investment to the value of the hypothetical account at the end of the period for
which the Non-Standardized Return is quoted.
As discussed in the Prospectus, the Fund may quote Non-Standardized Total
Returns that do not reflect the effect of sales charges. Non-Standardized
Returns may be quoted for the same or different time periods for which
Standardized Returns are quoted.
The Fund's Non-Standardized Returns, for its Class A shares, stated as aggregate
total returns, at October 31, 1994, were as follows:
<TABLE>
<CAPTION>
AGGREGATE TOTAL
PERIOD RETURN
- ------------------------------------------------------------------------------------------------------ -------------------
<S> <C>
Year ended October 31, 1994........................................................................... 34.10%
August 13, 1991 through October 31, 1994.............................................................. 102.13%
</TABLE>
The Fund's Non-Standardized Return for its Class B shares which were first
offered on April 1, 1993, stated as aggregate total returns, for the periods
shown, were:
<TABLE>
<CAPTION>
NON-STANDARDIZED
PERIOD RETURN
- ------------------------------------------------------------------------------------------------------ -------------------
<S> <C>
Year ended October 31, 1994........................................................................... 33.33%
April 1, 1993 through October 31, 1994................................................................ 61.94%
</TABLE>
The Fund's Non-Standardized Returns, for its Class A shares, stated as average
annualized total returns, at October 31, 1994, were as follows:
<TABLE>
<CAPTION>
NON-STANDARDIZED
AVERAGE ANNUALIZED
PERIOD TOTAL RETURN
- ------------------------------------------------------------------------------------------------------ -------------------
<S> <C>
Year ended October 31, 1994........................................................................... 34.10%
August 13, 1991 through October 31, 1994.............................................................. 24.44%
</TABLE>
The Fund's Non-Standard Returns for its Class B shares, stated as average
annualized total returns, for the periods shown, were:
<TABLE>
<CAPTION>
NON-STANDARDIZED
AVERAGE ANNUALIZED
PERIOD TOTAL RETURN
- ------------------------------------------------------------------------------------------------------ -------------------
<S> <C>
Year ended October 31, 1994........................................................................... 33.33%
April 1, 1993 through October 31, 1993................................................................ 35.58%
</TABLE>
Standardized Returns and Non-Standardized Returns are not presented for the
Advisor Class shares because no shares of that class were outstanding during the
fiscal year ended October 31, 1994.
The Fund's investment results will vary from time to time depending upon market
conditions, the composition of the Fund's portfolio and operating expenses of
the Fund, so that current or past yield or total return should not be considered
representative of what an investment in the Fund may earn in any future period.
These factors and possible differences in the methods used in calculating
investment results should be considered when comparing the Fund's investment
results with those published for other investment companies and other investment
vehicles. The Fund's results also should be considered relative to the risks
associated with the Fund's investment objective and policies. The Fund will
include performance data for all classes of shares of the Fund in any
advertisement or information including performance data for the Fund.
Statement of Additional Information Page 32
<PAGE>
G.T. LATIN AMERICA GROWTH FUND
The Fund and G.T. Global may from time to time compare the Fund with the
following:
(1) The Salomon Brothers Non-U.S. Dollars Indices, which are measures of
the total return performance of high quality non-U.S. dollar denominated
securities in major sectors of the worldwide bond markets.
(2) The Shearson Lehman Government/Corporate Bond Index, which is a
comprehensive measure of all public obligations of the U.S. Treasury
(excluding flower bonds and foreign targeted issues), all publicly issued
debt of agencies of the U.S. Government (excluding mortgage backed
securities), and all public, fixed rate, non-convertible investment grade
domestic corporate debt rated at least Baa by Moody's or BBB by S&P, or, in
the case of nonrated bonds, BBB by Fitch Investors Service (excluding
Collateralized Mortgage Obligations).
(3) Average of Savings Accounts, which is a measure of all kinds of
savings deposits, including longer-term certificates (based on figures
supplied by the U.S. League of Savings Institutions). Savings accounts offer
a guaranteed rate of return on principal, but no opportunity for capital
growth. During a portion of the period, the maximum rates paid on some
savings deposits were fixed by law.
(4) The Consumer Price Index, which is a measure of the average change
in prices over time in a fixed market basket of goods and services (e.g.,
food, clothing, shelter, fuels, transportation fares, charges for doctors'
and dentists' services, prescription medicines, and other goods and services
that people buy for day-to-day living).
(5) Data and mutual fund rankings published or prepared by Lipper
Analytical Data Services, Inc. ("Lipper"), CDA/Wiesenberger Investment
Company Service ("CDA/Wiesenberger"), and/or other companies that rank
and/or compare mutual funds by overall performance, investment objectives,
assets, expense levels, periods of existence and/ or other factors. In this
regard the Fund may be compared to the Fund's "peer group" as defined by
Lipper, CDA/ Wiesenberger and/or other firms as applicable, or to specific
funds or groups of funds within or without such peer group. Morningstar is a
mutual fund rating service that also rates mutual funds on the basis of
risk-adjusted performance. Morningstar ratings are calculated from a fund's
three, five and ten year average annual returns with appropriate fee
adjustments and a risk factor that reflects fund performance relative to the
three-month U.S. Treasury bill monthly returns. Ten percent of the funds in
an investment category receive five stars and 22.5% receive four stars. The
ratings are subject to change each month.
(6) Bear Stearns Foreign Bond Index, which provides simple average
returns for individual countries and GNP-weighted index, beginning in 1975.
The returns are broken down by local market and currency.
(7) Ibbottson Associates International Bond Index, which provides a
detailed breakdown of local market and currency returns since 1960.
(8) Standard & Poor's "500" Index which is a widely recognized index
composed of the capitalization-weighted average of the price of 500 of the
largest publicly traded stocks in the U.S.
(9) Salomon Brothers Broad Investment Grade Index which is a widely used
index composed of U.S. domestic government, corporate and mortgage-back
fixed income securities.
(10) Dow Jones Industrial Average.
(11) CNBC/Financial News Composite Index.
(12) Morgan Stanley Capital International World Indices, including, among
others, the Morgan Stanley Capital International Europe, Australia, Far East
Index ("EAFE Index"). The EAFE index is an unmanaged index of more than 800
companies of Europe, Australia and the Far East.
(13) Morgan Stanley Capital International Latin America Emerging Market
Indices, including the Morgan Stanley Emerging Markets Free Latin America
Index (which excludes Mexican banks and securities companies which cannot be
purchased by foreigners) and the Morgan Stanley Emerging Markets Global
Latin America Index. Both indices include 60% of the market capitalization
of the following countries: Argentina, Brazil, Chile and Mexico. The indices
are weighted by market capitalization and are calculated without dividends
reinvested.
(14) International Financial Corporation ("IFC") Latin American Indices
which include 60% of the market capitalization in the covered countries and
are market weighted. One index includes dividends and one excludes
dividends.
(15) Salomon Brothers World Government Bond Index and Salomon Brothers
World Government Bond Index-Non-U.S. are each a widely used index composed
of world government bonds.
Statement of Additional Information Page 33
<PAGE>
G.T. LATIN AMERICA GROWTH FUND
(16) The World Bank Publication of Trends in Developing Countries (TIDE)
provides brief reports on most of the World Bank's borrowing members. The
World Development Report is published annually and looks at global and
regional economic trends and their implications for the developing
economies.
(17) Salomon Brothers Global Telecommunications Index is composed of
telecommunications companies in the developing and emerging countries.
(18) Datastream and Worldscope each is an on-line database retrieval
service for information including but not limited to international financial
and economic data.
(19) International Financial Statistics, which is produced by the
International Monetary Fund.
(20) Various publications and annual reports such as the World
Development Report, produced by the World Bank and its affiliates.
(21) Various publications from the International Bank for Reconstruction
and Development/The World Bank.
(22) Various publications including but not limited to ratings agencies
such as Moody's Investors Services, Fitch Investors Service, Standard &
Poor's Ratings Group.
(23) Various publications from the Organization for Economic Cooperation
and Development (OECD).
(24) Wilshire Associates which is an on-line database for international
financial and economic data including performance measure for a wider range
of securities.
Indices, economic and financial data prepared by the research departments of
such financial organizations as Salomon Brothers, Inc., Lehman Brothers, Merrill
Lynch, Pierce, Fenner & Smith, Inc. J. P. Morgan, Morgan Stanley, Smith Barney
Shearson, S.G. Warburg, Jardine Flemming, Barings Securities, The Bank for
International Settlements, Asian Development Bank, Bloomberg, L.P. and Ibbottson
Associates may be used as well as information reported by the Federal Reserve
and the respective Central Banks of various nations. In addition, performance
rankings, ratings and commentary reported periodically in national financial
publications, included but not limited to Money Magazine, Smart Money, Global
Finance, EuroMoney, Financial World, Forbes, Fortune, Business Week, Latin
Finance, the Wall Street Journal, Emerging Markets Weekly, Kiplinger's Guide To
Personal Finance, Barron's, The Financial Times, USA Today, The New York Times,
Far Eastern Economic Review, The Economist and Investors Business Digest. Each
Fund may compare its performance to that of other compilations indices of
comparable quality to those listed above and other indices which may be
developed and made available.
G.T. Global believes that the above information relating to foreign market
performance, market capitalization and diversification may be useful to
investors considering whether and to what extent to diversify their investments
through the purchase of mutual funds investing in securities on a global basis.
However, this data is not a prediction of the performance of the Fund. The
performance of the Fund will differ from the historical performance of the
indices represented above. The performance of indices does not take expenses
into account, while the Fund incurs expenses in its operations which will reduce
performance. Moreover, the Fund is actively managed, i.e. G.T. Capital as the
Fund's investment manager actively purchases and sells securities in seeking the
Fund's investment objective; this will cause the performance of the Fund to
differ from the indices shown above.
G.T. Global believes the Fund is an appropriate investment for long-term
investment goals including but not limited to funding retirement, paying for
education or purchasing a house. The Fund does not represent a complete
investment program and the investors should consider the Fund as appropriate for
a portion of their overall investment portfolio with regard to their long-term
investment goals.
G.T. Global believes that a growing number of consumer products, including but
not limited to home appliances, automobiles and clothing, purchased by Americans
are manufactured abroad. G.T. Global believes that investing globally in the
companies that produce products for U.S. consumers can help U.S. investors seek
protection of the value of their assets against the potentially increasing costs
of foreign manufactured goods. Of course, there can be no assurance that there
will be any correlation between global investing and the costs of such foreign
goods unless there is a corresponding change in value of the U.S. dollar to
foreign currencies. From time to time, G.T. Global may refer to or advertise the
names of such companies although there can be no assurance that any G.T. Global
Mutual Fund may own the securities of these companies.
Statement of Additional Information Page 34
<PAGE>
G.T. LATIN AMERICA GROWTH FUND
From time to time, the Fund and G.T. Global may refer to the number of
shareholders in the Fund or the aggregate number of shareholders in all G.T.
Global Mutual Funds or the dollar amount of Fund assets under management in
advertising materials.
The Fund may compare its performance to that of other compilations or indices of
comparable quality to those listed above which may be developed and made
available in the future. The Fund may be compared in advertising to Certificates
of Deposit (CDs), the Bank Rate Monitor National Index, an average of the quoted
rates for 100 leading banks and thrifts in ten U.S. cities chosen to represent
the ten largest Consumer Metropolitan statistical areas, or other investments
issued by banks. The Fund differs from bank investments in several respects. The
Fund may offer greater liquidity or higher potential returns than CDs; but
unlike CDs, the Fund will have a fluctuating share price and return and is not
FDIC insured.
The Fund's performance may be compared to the performance of other mutual funds
in general, or to the performance of particular types of mutual funds. These
comparisons may be expressed as mutual fund rankings prepared by Lipper
Analytical Services, Inc. (Lipper), an independent service which monitors the
performance of mutual funds. Lipper generally ranks funds on the basis of total
return, assuming reinvestment of distributions, but does not take sales charges
or redemption fees into consideration, and is prepared without regard to tax
consequences. In addition to the mutual fund rankings, the Fund's performance
may be compared to mutual fund performance indices prepared by Lipper.
G.T. Global may provide information designed to help individuals understand
their investment goals and explore various financial strategies. For example,
G.T. Global may describe general principles of investing, such as asset
allocation, diversification and risk tolerance.
Ibbotson Associates of Chicago, Illinois (Ibbotson) provides historical returns
of the capital markets in the United States, including common stocks, small
capitalization stocks, long-term corporate bonds, intermediate-term government
bonds, long-term government bonds, Treasury bills, the U.S. rate of inflation
(based on the CPI), and combinations of various capital markets. The performance
of these capital markets is based on the returns of different indices.
G.T. Global Funds may use the performance of these capital markets in order to
demonstrate general risk-versus-reward investment scenarios. Performance
comparisons may also include the value of a hypothetical investment in any of
these capital markets. The risks associated with the security types in any
capital market may or may not correspond directly to those of the funds.
Ibbotson calculates total returns in the same method as the funds. The funds may
also compare performance to that of other compilations or indices that may be
developed and made available in the future.
In advertising materials, G.T. Global may reference or discuss its products and
services, which may include: retirement investing; the effects of dollar-cost
averaging and saving for college or a home. In addition, G.T. Global may quote
financial or business publications and periodicals, including model portfolios
or allocations, as they relate to fund management, investment philosophy, and
investment techniques.
The Fund may discuss its Quotron number, CUSIP number, and its current portfolio
management team.
From time to time, the Fund's performance also may be compared to other mutual
funds tracked by financial or business publications and periodicals. For
example, the fund may quote Morningstar, Inc. in its advertising materials.
Morningstar, Inc. is a mutual fund rating service that rates mutual funds on the
basis of risk-adjusted performance. In addition, the Fund may quote financial or
business publications and periodicals as they relate to fund management,
investment philosophy, and investment techniques. Rankings that compare the
performance of G.T. Global Funds to one another in appropriate categories over
specific periods of time may also be quoted in advertising.
The Fund may quote various measures of volatility and benchmark correlation such
as beta, standard deviction and R2 in advertising. In addition, the fund may
compare these measures to those of other funds. Measures of volatility seek to
compare the fund's historical share price fluctuations or total returns compared
to those of a benchmark. Measures of benchmark correlation indicate how valid a
comparative benchmark may be. All measures of volatility and correlation are
calculated using averages of historical data.
The Fund may advertise examples of the effects of periodic investment plans,
including the principle of dollar cost averaging. In such a program, an investor
invests a fixed dollar amount in a fund at periodic intervals, thereby
purchasing fewer shares when prices are high and more shares when prices are
low. While such a strategy does not assure a profit or guard against loss in a
declining market, the investor's average cost per share can be lower than if
fixed numbers of shares are purchased at the same intervals. In evaluating such
a plan, investors should consider their ability to continue purchasing shares
through periods of low price levels.
Statement of Additional Information Page 35
<PAGE>
G.T. LATIN AMERICA GROWTH FUND
Each Fund may be available for purchase through retirement plans or other
programs offering deferral of or exemption from income taxes, which may produce
superior after tax returns over time. For example, a $10,000 investment earning
a taxable return of 10% annually would have an after-tax value of $17,976 after
ten years, assuming tax was deducted from the return each year at a 39.6% rate.
An equivalent tax-deferred investment would have an after-tax value of $19,626
after ten years, assuming tax was deducted at a 39.6% rate from the deferred
earnings at the end of the ten-year period.
The Fund may describe in its sales material and advertisements how an investor
may invest in the G.T. Global Funds through various retirement plans that offer
deferral of income taxes on investment earnings and may also enable an investor
to make pre-tax contributions. Because of their advantages, these retirement
plans may produce returns superior to comparable non-retirement investments. The
Funds may also discuss these plans which include:
INDIVIDUAL RETIREMENT ACCOUNTS (IRAS): Any individual who receives earned income
from employment (including self-employment) can contribute up to $2,000 each
year to an IRA (or if less, 100% of compensation). If your spouse is not
employed, a total of $2,250 may be contributed each year to IRAs set up for you
and your spouse (subject to the maximum of $2,000 to either IRA). Some
individuals may be able to take an income tax deduction for the contribution.
Regular contributions may not be made for the year you become 70 1/2, or
thereafter. Please consult your tax advisor for more information.
ROLLOVER IRAS: Individuals who receive distributions from qualified retirement
plans (other than required distributions) and who wish to keep their savings
growing tax-deferred can rollover (or make a direct transfer of) their
distribution to a Rollover IRA. These accounts can also receive rollovers or
transfers from an existing IRA. If an "eligible roll-over distribution" from a
qualified employer-sponsored retirement plan is not directly rolled over to an
IRA (or certain qualified plans), withholding at the rate of 20% will be
required for federal income tax purposes. A distribution from a qualified plan
that is not an "eligible rollover distribution," including a distribution that
is one of a series of substantially equal periodic payments, generally is
subject to regular wage withholding or withholding at the rate of 10% (depending
on the type and amount of the distribution), unless you elect not to have any
withholding apply. Please consult your tax advisor for more information.
SEP-IRAS AND SALARY-REDUCTION SEP-IRAS: Simplified employee pension (SEP) plans
and salary-reduction SEPs provide self-employed individuals (and any eligible
employees) with benefits similar to Keogh-type plans or 401(k) plans, but with
fewer administrative requirements and therefore potential lower annual
administration expenses.
403(B)(7) CUSTODIAL ACCOUNTS: Employees of public schools and most other
not-for-profit corporations can make pre-tax salary reduction contributions to
these accounts.
PROFIT-SHARING (INCLUDING 401(K)) AND MONEY PURCHASE PENSION PLANS: Corporations
can sponsor these qualified defined contribution plans for their employees. A
401(k) plan, a type of profit-sharing plan, additionally permits the eligible,
participating employees to make pre-tax salary reduction contributions to the
plan (up to certain limitations).
G.T. Global may from time to time in its sales methods and advertising discuss
the risks inherent in investing. The major types of investment risk are market
risk, industry risk, credit risk, interest rate risk and inflation risk. Risk
represents the possibility that you may lose some or all of your investment over
a period of time. A basic tenet of investing is the greater the potential
reward, the greater the risk.
From time to time, the Fund and G.T. Global will quote information including but
not limited to data regarding: individual countries, regions, world stock
exchanges, and economic and demographic statistics such as:
1) Stock market capitalization: Morgan Stanley Capital International World
Indices, International Finance Corporation and Datastream.
2) Stock market trading volume: Morgan Stanley Capital International World
Indices, International Finance Corporation.
3) The number of listed companies: International Finance Corporation, G.T.
Guide to World Equity Markets, Salomon Brothers, Inc., S.G. Warburg and
Barings Securities.
4) Wage rates: U.S. Department of Labor Statistics and Morgan Stanley Capital
International World Indices.
5) International industry performance: Morgan Stanley Capital International
World Indices, Wilshire Associates and Salomon Brothers, Inc.
6) Stock market performance: Morgan Stanley Capital International World
Indices, International Finance Corporation and Datastream.
7) The Consumer Price Index and inflation rate: The World Bank, Datastream and
International Finance Corporation.
Statement of Additional Information Page 36
<PAGE>
G.T. LATIN AMERICA GROWTH FUND
8) Gross Domestic Product (GDP): Datastream and The World Bank.
9) GDP growth rate: International Finance Corporation, The World Bank and
Datastream.
10) Population: The World Bank, Datastream and United Nations.
11) Average annual growth rate (%) of population: The World Bank, Datastream and
United Nations.
12) Age distribution within populations: Organization for Economic Cooperation
and Development and United Nations.
13) Total exports and imports by year: International Finance Corporation, The
World Bank and Datastream.
14) Top three companies by country or market: International Finance Corporation,
G.T. Guide to World Equity Markets, Salomon Brothers Inc., S.G. Warburg and
Barings Securities.
15) Foreign direct investments to developing countries: The World Bank and
Datastream.
16) Supply, consumption, demand and growth in demand of certain products,
services and industries, including, but not limited to, electricity, water,
transportation, construction materials, natural resources, financial
services, health care services and supplies, consumer products and services
and telecommunications equipment and services (sources of such information
may include, but would not be limited to, The World Bank, OECD, IMF,
Bloomberg and Datastream.
In advertising and sales materials, G.T. Global may make reference to or discuss
its products, services and accomplishments. Among these accomplishments are that
in 1983 G.T. Global provided assistance to the government of Hong Kong in
linking its currency to the U.S. dollar, and that in 1987 Japan's Ministry of
Finance licensed G.T. Management (Japan) Ltd. as one of the first foreign
discretionary investment managers for Japanese investors. Such accomplishments,
however, should not be viewed as an endorsement of G.T. Global by the government
of Hong Kong, Japan's Ministry of Finance or any other government or government
agency. Nor do any such accomplishments of G.T. Global provide any assurance
that the G.T. Global Mutual Funds' investment objectives will be achieved.
THE G.T. ADVANTAGE
G.T. Capital has developed a unique team approach to its global money management
which we call the G.T. Advantage. G.T. Capital's money management style combines
the best of the "top-down" and "bottom-up" investment manager strategies. The
top-down approach is implemented by G.T. Capital's Investment Policy Committee
which sets broad guidelines for asset allocation and currency management based
on G.T. Capital's own macroeconomic forecasts and research from our worldwide
offices. The bottom-up approach utilizes regional teams of individual portfolio
managers to implement the committee's guidelines by selecting local securities
that offer strong growth potential.
IMPORTANT POINTS TO NOTE ABOUT THE ABOVE DATA RELATING TO WORLD EQUITY
PERFORMANCE, WORLD EQUITY MARKET CAPITALIZATION AND WORLD EQUITY
DIVERSIFICATION.
The information contained above relating to foreign market performance, market
capitalization and diversification is based on sources believed to be reliable,
but is not all-inclusive. The authors and publishers of such material are not to
be considered as "experts" under the Securities Act of 1933 on account of the
inclusion of such information herein. Stocks chosen by Morgan Stanley Capital
International for inclusion in its various international market indices may not
necessarily constitute a representative cross-section of the particular markets.
A portion of the equity and bond performance figures for each market includes
the positive or negative effects of the currency exchange rates effective at
December 31 of each year between the U.S. dollar and currency of the foreign
market (e.g. Japanese Yen, German Deutschemark, Hong Kong Dollar). A foreign
currency which has strengthened or weakened against the U.S. dollar will
positively or negatively affect the reported returns, as the case may be.
G.T. Global believes that the above information relating to foreign market
performance, market capitalization and
diversification may be useful to investors considering whether and to what
extent to diversify their investments through the purchase of mutual funds
investing in equity and/or debt securities on a global basis. However, this data
is not a representation of the past performance of the Fund nor is it a
prediction of such performance. The performance of the Fund will differ from the
historical performance of the indices represented above. The performance of
indices does not take expenses into account, while the Fund incurs expenses in
its operations that will reduce performance. Moreover, the Fund is actively
managed, i.e. G.T. Capital as the Fund's investment manager actively purchases
and sells securities in seeking the Fund's investment objective; this will cause
the performance of the Fund to differ from the indices shown above. Moreover,
the Fund's concentration in the equity and debt securities of Latin American
issuers will cause the Fund's performance to differ from the general equity and
bond indices referred to in the historical performance data provided above.
Statement of Additional Information Page 37
<PAGE>
G.T. LATIN AMERICA GROWTH FUND
EQUITY MARKET DIVERSIFICATION
As indicated by the following table, a globally diversified equity portfolio for
the ten-year period ended December 31, 1994, resulted in greater return and
reduced risk (as measured by price volatility) relative to a portfolio
consisting solely of U.S. equities. The following chart was prepared by G.T.
Capital. It uses the Morgan Stanley Capital International EAFE Index as a
"proxy" for the non-North America investment universe ("Non-U.S.") and the
Standard & Poor's 500 Index as a "proxy" for the universe of U.S. stocks
("U.S."). All dividends and other distributions were assumed to be reinvested.
The time period shown was generally a period of increasing market prices for
global equity securities.
EQUITY MARKET DIVERSIFICATION
10 YEARS ENDED DECEMBER 31, 1994
<TABLE>
<CAPTION>
PORTFOLIO STANDARD AVERAGE ANNUAL
% NON-U.S./% U.S. DEVIATION (%) TOTAL RETURN (%)
- ------------------- --------------- -----------------
<S> <C> <C>
100/0 19.35 17.89
90/10 18.15 17.59
80/20 17.06 17.27
70/30 16.11 16.95
60/40 15.32 16.61
50/50 14.73 16.27
40/60 14.35 15.92
30/70 14.20 15.56
20/80 14.29 15.19
10/90 14.61 14.81
0/100 15.16 14.42
<FN>
- --------------
Source: Morgan Stanley Capital International (MSCI) Europe, Australia, Far East
(EAFE) Index vs. MSCI U.S. Index, December 31, 1994. Prepared by G.T. Capital
Management, Inc.
</TABLE>
Standard deviation of returns is a statistical measure of the degree to which a
value tends to vary from its average annual mean. In general, greater risk must
be assumed to generate greater returns. This data will not correspond to the
actual performance of any of the G.T. Global Mutual Funds. There is no guarantee
that stock market diversification will provide greater total return and/or less
volatility than non-diversification during a particular time period.
Statement of Additional Information Page 38
<PAGE>
G.T. LATIN AMERICA GROWTH FUND
From time to time the Fund and G.T. Global may quote data for stock market
trading volume and number of listed companies from information provided by the
International Finance Corporation (IFC) for, but not limited to, the following
countries:
NUMBER OF LISTED COMPANIES AND TRADING VOLUME
<TABLE>
<CAPTION>
NUMBER OF ANNUAL
LISTED TRADING VOLUME
COMPANIES (US$ MILLIONS)
----------- ---------------
<S> <C> <C>
Canada............................................................................. 1,124 142,222
U.S................................................................................ 7,607 3,507,223
Argentina.......................................................................... 180 10,339
Brazil............................................................................. 550 57,409
Chile.............................................................................. 263 2,797
Colombia........................................................................... 89 732
Mexico............................................................................. 190 62,454
Venezuela.......................................................................... 93 1,874
Korea.............................................................................. 693 211,710
Philippines........................................................................ 180 6,785
Taiwan............................................................................. 183 43,395
India.............................................................................. 6,800 21,879
Indonesia.......................................................................... 174 9,158
Malaysia........................................................................... 410 153,661
Pakistan........................................................................... 653 1,844
Hong Kong.......................................................................... 450 131,550
Singapore.......................................................................... 178 81,623
Japan.............................................................................. 2,155 954,341
Australia.......................................................................... 1,070 67,711
New Zealand........................................................................ 136 6,785
Greece............................................................................. 143 2,713
Jordan............................................................................. 101 1,377
Nigeria............................................................................ 174 10
Portugal........................................................................... 183 4,835
Turkey............................................................................. 152 23,242
UK................................................................................. 1,646 423,526
France............................................................................. 472 174,283
Germany............................................................................ 426 302,985
<FN>
- --------------
Source: Emerging Stock Markets Factbook 1994, International Finance Corporation
(IFC), June 1994.
</TABLE>
From time to time the Fund and G.T. Global may also quote information similar to
that shown above including such data from established markets from, but not
limited to, other sources such as S.G. Warburg, Salomon Brothers and Datastream.
Statement of Additional Information Page 39
<PAGE>
G.T. LATIN AMERICA GROWTH FUND
From time to time the Fund and G.T. Global may quote information on
sector/industry stock market capitalization and total returns for, but not
limited to, the following Morgan Stanley Capital International industry indices:
MORGAN STANLEY CAPITAL INTERNATIONAL
INTERNATIONAL INDUSTRY INDICES DECEMBER 31, 1994 (US$ WITHOUT DIVIDENDS)
<TABLE>
<CAPTION>
ANNUALIZED RETURNS (%)
MARKET CAPITALIZATION ------------------------------------
(US$ BN) 1 YEAR 3 YEARS 5 YEARS 10 YEARS
--------------------- ------ ------- ------- --------
<S> <C> <C> <C> <C> <C>
ENERGY
Energy Sources.................................. 447.6 5.40 4.05 2.35 10.72
Utilities -- Electrical & Gas................... 412.8 -11.94 -0.05 -1.03 9.88
Sector........................................ 860.4
MATERIALS
Building Materials & Components................. 107.9 -4.87 5.17 -1.34 13.68
Chemicals....................................... 303.5 15.59 7.33 2.47 14.06
Forest Products & Paper......................... 111.2 9.97 5.74 0.96 10.76
Metals -- Non Ferrous........................... 92.1 12.77 9.54 1.49 10.42
Metals -- Steel................................. 109.8 26.99 6.24 -7.78 13.56
Misc. Materials & Commodities................... 73.1 9.52 6.97 -0.72 12.00
Sector........................................ 797.6
CAPITAL EQUIPMENT
Aerospace & Military Technology................. 59.1 6.34 8.97 6.06 7.13
Construction & Housing.......................... 103.1 2.36 -5.42 -9.33 16.82
Data Processing & Reproduction.................. 107.0 22.96 -0.53 -3.43 -1.20
Electrical & Electronics........................ 264.9 3.77 7.35 2.80 11.80
Electronic Components & Instruments............. 177.2 15.59 7.33 2.47 14.06
Energy Equipment & Services..................... 20.7 -13.03 -3.86 -3.90 3.21
Industrial Components........................... 126.7 16.11 14.02 2.49 12.22
Machinery & Engineering......................... 177.8 18.97 9.29 0.32 14.45
Sector........................................ 1036.5
CONSUMER GOODS
Appliances & Household Durables................. 136.5 18.11 10.40 0.39 11.20
Automobiles..................................... 233.7 12.06 15.36 2.61 12.27
Beverages & Tobacco............................. 260.5 4.93 -1.30 6.57 18.26
Food & Household Products....................... 277.8 5.12 2.10 4.68 17.21
Health & Personal Care.......................... 517.4 9.54 -0.91 8.69 17.09
Recreation, Other Consumer Goods................ 93.5 9.20 4.78 1.49 9.86
Textiles & Apparel.............................. 30.9 5.21 -3.29 -5.32 11.12
Sector........................................ 1550.3
SERVICES
Broadcasting & Publishing....................... 145.4 0.80 13.97 5.08 13.77
Business & Public Services...................... 267.2 9.71 10.04 5.61 13.82
Leisure & Tourism............................... 114.3 -2.56 11.13 3.04 15.59
Merchandising................................... 389.4 -2.54 2.66 5.45 15.15
Telecommunications.............................. 375.5 -5.99 5.72 3.36 11.47
Transportation -- Airlines...................... 50.1 4.61 0.86 -3.68 10.67
Transportation -- Road & Rail................... 103.8 -0.70 3.59 -4.67 12.25
Transportation -- Shipping...................... 36.5 7.17 4.04 -4.12 15.00
Wholesale & International Trade................. 66.0 35.10 9.31 -3.01 14.63
Sector........................................ 1546.2
FINANCE
Banking......................................... 1008.9 0.71 4.63 -0.66 15.28
Financial Services.............................. 181.9 8.01 5.29 -2.93 13.77
Insurance....................................... 282.9 -2.55 5.06 1.34 13.21
Real Estate..................................... 110.6 -20.78 6.62 0.21 15.36
Sector........................................ 1584.3
MULTI INDUSTRY
Multi-Industry.................................. 237.6 -6.75 7.70 4.66 11.80
Sector........................................ 237.6
GOLD MINES
Gold Mines...................................... 37.8 -11.16 14.07 0.20 2.37
Sector........................................ 37.8
<FN>
- --------------
The Fund(s) and G.T. Global may also quote information from, but not limited to,
the International Finance Corporation (IFC), S.G. Warburg, Salomon Brothers,
World Scope, Bloomberg, Datastream and Wilshire Associates, Inc.
</TABLE>
The investment objectives and policies of the G.T. Global Mutual Funds and their
portfolios and performance will not correspond to the composition and
performance of MSCI industry indices.
Statement of Additional Information Page 40
<PAGE>
G.T. LATIN AMERICA GROWTH FUND
From time to time the Fund and G.T. Global may quote information on stock market
capitalization and total returns for, but not limited to, the following Morgan
Stanley Capital International stock market indices:
MORGAN STANLEY CAPITAL INTERNATIONAL
INTERNATIONAL INDICES 12/31/94 (US$, GROSS DIVIDENDS REINVESTED)
<TABLE>
<CAPTION>
MARKET ANNUALIZED RETURNS (%)
CAPITALIZATION ------------------------------------
(US$BN) 1 YEAR 3 YEARS 5 YEARS 10 YEARS
-------------- ------ ------- ------- --------
<S> <C> <C> <C> <C> <C>
INTERNATIONAL INDICES
THE WORLD............................. 7,592.9 5.58 7.42 4.24 15.51
NORTH AMERICA......................... 2,918.2 1.73 6.07 8.52 13.94
EAFE.................................. 4,661.8 8.06 8.19 1.82 17.89
EUROPE 14............................. 2,084.1 2.66 8.46 6.98 18.99
NORDIC COUNTRIES...................... 156.2 20.57 11.62 5.06 19.79
PACIFIC............................... 2,577.6 13.03 7.93 -1.62 17.06
FAR EAST.............................. 2,436.8 13.45 7.78 -2.07 17.22
FREE INDICES
THE WORLD FREE........................ 7,602.4 5.57 7.43 4.27
EAFE FREE............................. 4,671.3 -4.17 7.57 1.78
EUROPE 14 FREE........................ 2,080.5 -3.09 8.28 7.11
EUROPE 14 FREE EX UK.................. -0.57 10.02 6.44
NORDIC COUNTRIES FREE................. 152.6 4.91 12.16 6.51
PACIFIC FREE.......................... 2,590.0 -5.04 7.06 -1.76
PACIFIC FREE EX JAPAN................. -18.65 14.34 14.00
FAR EAST FREE......................... -4.81 6.91 -2.18
SPECIAL AREAS
THE WORLD EX USA...................... 7.64 7.93 1.76 17.13
EAFE + CANADA......................... 7.65 7.89 1.76 17.29
KOKUSAI (WORLD EX JAPAN).............. 0.55 7.85 8.35 15.51
EASEA (EAFE EX JAPAN)................. -0.77 9.83 8.05 18.98
PACIFIC EX JAPAN...................... -13.99 18.42 15.31 18.80
THE WORLD EX THE UK................... 6.48 7.63 3.82 15.21
EAFE EX THE UK........................ 10.22 8.74 0.70 17.97
EUROPE 14 EX THE UK................... 1,351.6 5.27 10.22 6.08 19.87
THE WORLD EX AUSTRALIA................ 5.57 7.39 4.19 15.51
National Indices
AUSTRALIA............................. 122.8 6.48 9.48 8.37 15.98
AUSTRIA............................... 17.5 -6.05 2.74 0.40 23.31
BELGIUM............................... 48.5 9.43 10.92 7.23 24.90
CANADA................................ 168.1 -2.43 0.76 0.12 8.17
DENMARK............................... 34.4 4.25 0.09 3.17 17.17
FINLAND............................... 25.9 52.47 34.70 6.81
FINLAND FREE.......................... 25.9 52.47 33.65 7.77
FRANCE................................ 275.0 -4.70 6.20 4.23 20.83
GERMANY............................... 290.1 5.11 8.95 5.09 18.73
GREECE................................ 7.6 -0.78 -0.81 8.05
HONG KONG............................. 154.1 -28.90 26.79 27.18 26.50
IRELAND............................... 12.1 14.50 8.71 3.71
ITALY................................. 98.5 12.13 4.52 -1.54 17.14
JAPAN................................. 2,121.1 21.62 6.36 -3.43 16.86
MALAYSIA.............................. 105.3 -19.94 25.57 13.86
NETHERLANDS........................... 163.9 12.66 16.74 13.18 22.05
NEW ZEALAND........................... 18.1 10.27 23.39 7.57
NORWAY................................ 18.5 24.07 11.39 3.49 16.03
NORWAY FREE........................... 14.8 27.41 13.14 4.78
PORTUGAL.............................. 8.5 11.95 8.01 -3.48
SINGAPORE............................. 56.3 6.68 23.95 16.02 16.50
SINGAPORE FREE........................ 69.5 5.81 24.23 18.65
</TABLE>
Statement of Additional Information Page 41
<PAGE>
G.T. LATIN AMERICA GROWTH FUND
<TABLE>
<CAPTION>
MARKET ANNUALIZED RETURNS (%)
CAPITALIZATION ------------------------------------
(US$BN) 1 YEAR 3 YEARS 5 YEARS 10 YEARS
-------------- ------ ------- ------- --------
<S> <C> <C> <C> <C> <C>
SPAIN................................. 80.0 -3.93 -0.08 0.37 20.05
SWEDEN................................ 77.4 18.80 12.22 5.37 21.43
SWEDEN FREE........................... 77.4 18.80 15.40 7.70
SWITZERLAND........................... 210.0 4.18 21.77 14.81 21.32
SWITZERLAND FREE...................... 210.0 4.18 21.97 14.85
UNITED KINGDOM........................ 732.6 -1.63 5.65 8.58 17.73
USA................................... 2,750.1 2.00 6.42 9.16 14.36
EAFE (GDP WEIGHTED)................... 8.21 9.65 3.97 19.91
EMERGING MARKETS
EMG (EMERGING MARKETS GLOBAL)......... 840.4 -1.07 20.41 9.52
EMG FAR EAST.......................... 469.4 1.05 21.99 2.43
EMG LATIN AMERICA..................... 281.0 -3.69 19.73 32.62
EMF (EMERGING MARKETS FREE)........... 594.2 -7.32 21.76 20.89
EMF FAR EAST.......................... 235.5 -13.97 26.90 13.12
EMF LATIN AMERICA..................... 268.7 0.64 20.66 32.23
INDIA................................. 55.2 9.93
INDONESIA............................. 22.1 -25.92 14.98 -2.15
KOREA................................. 121.5 23.67 18.17 0.26
MALAYSIA.............................. 105.3 -19.94 25.57 13.86
PAKISTAN.............................. 6.9 -7.09 0.00 0.00
PHILIPPINES........................... 20.9 0.80 47.51 21.44
PHILIPPINES FREE...................... 13.2 -7.88 41.69 23.46
SRI LANKA............................. 1.3 -3.03
TAIWAN................................ 129.0 20.78 19.40 -2.98
THAILAND.............................. 70.6 -9.03 35.86 17.47
ARGENTINA............................. 24.2 -23.63 -9.39 28.67
BRAZIL................................ 94.8 65.73 46.49 26.87
CHILE................................. 38.8 44.76 34.06 46.83
COLOMBIA.............................. 7.3 21.30
MEXICO................................ 108.4 -43.39 2.94 29.69
MEXICO FREE........................... 96.7 -40.55 3.53 32.47
PERU.................................. 4.3 45.42
VENEZUELA............................. 3.0 -34.14
VENEZUELA FREE........................ 2.4 -14.55
GREECE................................ 7.6 -0.78 -0.81 8.05
ISRAEL................................ 13.2
ISRAEL - DOMESTIC..................... 10.9
ISRAEL - NON DOMESTIC................. 2.3
JORDAN................................ 1.2 -8.70 15.66 10.60
PORTUGAL.............................. 8.5 11.95 8.01 -3.48
TURKEY................................ 9.3 -50.49 -4.23 -7.47
COMBINED FAR EAST FREE................ 2,580.2 12.07 8.44 -1.68
COMBINED FAR EAST EX JAPAN............ 679.8 -7.40 24.17 9.17
COMBINED FAR EAST FREE EX JAPAN....... 459.2 -17.48 26.91 20.14
EAFE + EMG............................ 5,396.8 6.42 8.79 2.22
EAFE + EMF............................ 5,150.7 5.91 8.39 2.25
ALL-COUNTRY WORLD INDEX............... 8,344.7 3.85 7.50 4.21
</TABLE>
The Fund and G.T. Global may also quote information similar to that shown above
from other sources, but not limited to, the International Finance Corporation
(IFC) S.G. Warburg, Salomon Brothers, Wilshire Associates, Inc. and Datastream.
Market capitalization is not a measure of investment performance. Accordingly,
the above market capitalization figures are not intended to illustrate
investment performance in any individual developing market. Although the period
from December 31, 1984 to December 31, 1994 was one of growing market
capitalization throughout the world, market capitalization in certain emerging
markets encountered periods of volatility rather than a steadily increasing
trend.
The investment objectives of the G.T. Global Mutual Funds and their portfolios
and performance will not correspond to the composition and performance of the
MSCI indices.
Statement of Additional Information Page 42
<PAGE>
G.T. LATIN AMERICA GROWTH FUND
From time to time, each Fund and G.T. Global may quote and compare real GDP
growth rates of emerging and established countries.
REAL GDP GROWTH RATES (ANNUAL PERCENT CHANGE)
<TABLE>
<CAPTION>
ESTABLISHED EMERGING
COUNTRIES COUNTRIES
----------- ---------
<S> <C> <C>
1993................................................................................... 1.2% 6.1%
1992................................................................................... 1.6% 5.9%
1991................................................................................... 0.6% 4.4%
1990................................................................................... 2.4% 3.7%
1989................................................................................... 3.3% 4.0%
1988................................................................................... 4.4% 5.3%
1987................................................................................... 3.2% 5.7%
1986................................................................................... 2.9% 5.0%
<FN>
- --------------
Source: International Monetary Fund, World Economic Outlook -- October 1994,
October 1994.
</TABLE>
WAGE RATES
From time to time the Fund and G.T. Global may quote data on wage rates for, but
not limited to, the following countries:
<TABLE>
<CAPTION>
US$ PER
HOUR
-----------
<S> <C>
Germany.............................................................................................. $ 25.56
Switzerland.......................................................................................... $ 22.66
Japan................................................................................................ $ 19.20
Sweden............................................................................................... $ 17.91
U.S.................................................................................................. $ 16.79
Canada............................................................................................... $ 16.36
France............................................................................................... $ 16.31
Italy................................................................................................ $ 15.97
UK................................................................................................... $ 12.82
Australia............................................................................................ $ 12.25
Spain................................................................................................ $ 11.53
New Zealand.......................................................................................... $ 8.01
Singapore............................................................................................ $ 5.38
South Korea.......................................................................................... $ 5.37
Taiwan............................................................................................... $ 5.23
Asian NIE's.......................................................................................... $ 5.15
Portugal............................................................................................. $ 4.60
Hong Kong............................................................................................ $ 4.31
Mexico............................................................................................... $ 2.65
<FN>
- --------------
Source: U.S. Department of Labor, Bureau of Labor Statistics, International
Comparison of Hourly Compensation Costs for Production Workers in Manufacturing,
1993, Report 873, June 1994.
</TABLE>
G.T. Global and the Fund may also quote information similar to that shown above
from other sources such as, but not limited to S.G. Warburg and Morgan Stanley.
Statement of Additional Information Page 43
<PAGE>
G.T. LATIN AMERICA GROWTH FUND
From time to time the Fund and G.T. Global may quote information on the top
companies listed on an exchange or index for countries such as, but not limited
to, the following:
<TABLE>
<CAPTION>
THREE LARGEST COMPANIES
<S> <C>
MEXICO Telmex
Banacci
Tlevisa
CHILE Telefonos
Endesa
Enersis
ARGENTINA YPF
Telefonica de Argentina
Telecom Arg. Stet-France Telecom.
BRAZIL Telebras
Electrobras
Petrobras
JAPAN Mitsubishi Bank
Industrial Bank of Japan
Toyota Motor
HONG KONG HSBC Holdings plc
Hong Kong Telecommunications
Sun Hung Kai Properties
SOUTH KOREA KEPCO
POSCO
Samsung Electronics
TAIWAN Cathjay Life Insurance Co. Ltd.
Hua Nan Commercial Bank
First Commercial Bank
SINGAPORE Singapore Telecom Ltd.
OCBC Bank Ltd.
Singapore Airlines Ltd.
MALAYSIA TNB
Telekom
Resorts
THAILAND Telecomasia
Bangkok Bank
Shinawatra
INDONESIA Barito Pacific Timber
Astra Int'l Inc
H M Sampoerna
PHILIPPINES San Miguel Corp. (A & B)
Philippine Long Distance Telephone Co.
Ayala Corp. (A & B)
AUSTRALIA BHP
News Corporation
National Australia Bank
<CAPTION>
THREE LARGEST COMPANIES
<S> <C>
NEW ZEALAND Telecom Corporation of New Zealand Ltd.
Carter Holt Harvey Ltd.
Fletcher Challenge Ltd - Ordinary Division
UNITED KINGDOM British Telecommunications
HSBC Holdings
Shell Transport & Trading Co. (The)
GERMANY Allianz AG Holding N-AKT
Siemens AG
Deutsche Bank AG
FRANCE Alcatel Alsthom
Elf Aquitaine
Eaux (Cie Gie des)
NETHERLANDS Royal Dutch
Unilever Cert.
Internationale Nederlanden Groep
SPAIN Endesa
Telefonica
Bayer AG
ITALY Generali Assicurazioni
Sip
Stet
SWITZERLAND Roche
Nestle
UBS
SWEDEN Astra
Ericsson
ASEA
DENMARK Novo Nordisk B
Den Danske Bank
Sophus Berendsen
NORWAY Norsk Hydro
Hafslund Nycomed
Kvaerner
FINLAND Nokia Corporation
Repola Ltd.
Kymmene Corporation
U.S. (NYSE) Exxon Corp.
General Electric Co.
Coca Cola Co.
CANADA General Motors
Mobil Corporation
Ford Motor Co.
<FN>
- ------------------
Source: The G. T. Guide to World Equity Markets 1994-1995. Euromoney
Publications Plc, 1994.
</TABLE>
From time to time G.T. Global and the Fund will quote information similar to
that shown above from sources other than G.T. Capital Management Inc. such as,
but not limited to, S.G. Warburg, Morgan Stanley Capital International and World
Scope. There can be no assurance that any of the G.T. Global Mutual Funds will
own or will continue to own the securities of any of the companies listed above.
Statement of Additional Information Page 44
<PAGE>
G.T. LATIN AMERICA GROWTH FUND
From time to time the Fund and G.T. Global may quote data for GDP, GDP Growth,
Population, Per Capita GDP, Total Exports, Total Imports and Inflation Rates
for, but not limited to, the following countries:
<TABLE>
<CAPTION>
GDP (US$ GDP GROWTH POPULATION TOTAL EXPORTS TOTAL IMPORTS INFLATION
MILLIONS) RATE (%) (MILLIONS) (US$ MILLIONS) (US$ MILLIONS) RATE (%)
-------------- ---------- ---------- -------------- -------------- --------
<S> <C> <C> <C> <C> <C> <C>
Hong Kong............................... 77,828 5.5 5.8 30,251 123,427 8.5
China................................... 506,075 13.1 1162.2 84,940 80,585 13.0
South Korea............................. 296,136 5.3 43.7 76,394 81,413 4.8
Taiwan.................................. n/a 5.7 n/a 88,337 70,071 2.9
Singapore............................... 46,025 9.8 2.8 63,386 72,067 2.4
Malaysia................................ 57,568 7.4 18.6 40,705 38,361 3.6
Indonesia............................... 126,364 6.5 184.3 33,815 27,280 9.7
Thailand................................ 110,337 7.8 58.0 32,473 40,466 3.3
Philippines............................. 52,462 1.8 64.3 9,790 15,465 7.6
India................................... 214,598 4.1 883.6 19,795 22,530 9.9
Pakistan................................ 41,904 5.1 119.3 7,264 9,360 8.7
Australia............................... 294,760 3.0 17.5 38,045 42,140 1.1
New Zealand............................. 41,304 3.7 3.4 9,338 9,200 1.6
Japan................................... 3,670,979 0.1 124.5 339,492 230,975 1.3
Brazil.................................. 360,405 5.0 153.9 35,956 23,115 2,103.3
Mexico.................................. 329,011 0.4 85.0 27,166 47,877 9.8
Argentina............................... n/a 6.0 33.1 12,235 14,864 10.6
Venezuela............................... 61,137 -1.0 20.2 13,997 12,222 38.7
Chile................................... 41,203 6.0 13.6 9,646 9,456 12.7
Portugal................................ 79,547 -0.8 9.8 18,541 30,482 6.8
Turkey.................................. 99,696 6.8 58.5 14,715 22,871 65.5
Poland.................................. 83,823 4.0 38.4 13,324 15,309 35.3
Hungary................................. 35,218 -1.6 10.3 10,700 11,078 22.5
Greece.................................. 67,278 n/a 10.3 9,842 23,407 14.0
United Kingdom.......................... 903,126 1.9 57.8 190,481 221,658 3.4
France.................................. 1,319,883 -0.7 57.4 231,452 238,299 2.1
Netherlands............................. 320,290 3.0 15.2 139,919 134,376 1.5
Spain................................... 574,844 -1.0 39.1 64,302 99,473 4.3
Italy................................... 1,222,962 -7.0 57.8 178,349 184,510 4.4
Switzerland............................. 241,406 -0.7 6.9 65,616 65,603 2.3
Sweden.................................. 220,834 -1.7 8.7 55,933 49,849 2.9
Norway.................................. 112,906 1.8 4.3 35,178 25,897 2.4
Finland................................. 93,869 -2.6 5.0 23,515 20,741 1.2
Denmark................................. 123,546 0.3 5.2 39,570 33,601 1.2
United States........................... 5,920,199 3.0 255.4 420,812 551,591 3.0
<FN>
- --------------
Sources: 1992 GDP, mid-1992 population, 1992 exports and 1992 imports, The World
Development Report 1994. The World Bank, June 1994; 1993 GDP Growth Rate and
1993 Inflation Rate, World Economic Outlook -- October 1994, International
Monetary Fund, October 1994.
</TABLE>
G.T. Global and the Fund may also quote the information from other sources such
as, but not limited to, International Financial Statistics, an IMF publication,
and Trends in Developing Economies, a World Bank publication.
Statement of Additional Information Page 45
<PAGE>
G.T. LATIN AMERICA GROWTH FUND
G.T. believes that before emerging market countries with high debt levels can
attract substantial amounts of foreign capital, they must put their financial
houses in order. Some emerging markets governments have implemented debt
restructuring programs. From time to time, the Fund may include in its
advertising and sales material information on emerging market countries' debt
restructuring activities.
COUNTRIES CURRENTLY RESTRUCTURING UNDER
THE BRADY PLAN
<TABLE>
<CAPTION>
FIRST BOND
ISSUANCE
------------------
<S> <C>
Mexico............................................................................ March 1990
Costa Rica........................................................................ May 1990
Venezuela......................................................................... December 1990
Uruguay........................................................................... February 1991
Nigeria........................................................................... January 1992
Philippines....................................................................... December 1992
Argentina......................................................................... April 1993
Brazil............................................................................ April 1994
Bulgaria.......................................................................... July 1994
Dominican Republic................................................................ August 1994
Poland............................................................................ October 1994
Ecuador........................................................................... In progress
Peru.............................................................................. In progress
Panama............................................................................ In progress
</TABLE>
Source:
G.T. CAPITAL MANAGEMENT, INC., MAY 1995
Foreign Direct Investment is defined by the World Bank as "investment that is
made to acquire a lasting interest (usually 10 percent of the voting stock) in
an enterprise operating in a country other than that of the investor, the
investor's purpose being an effective voice in the management of the
enterprise."
FOREIGN DIRECT INVESTMENT FLOWS
(US$ MILLIONS)
<TABLE>
<CAPTION>
1994
1989 1990 1991 1992 1993 ESTIMATE
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
ALL DEVELOPING COUNTRIES..................................... 25687.1 26711.7 36810.1 47076.4 66614 77918.4
East Asia and Pacific........................................ 9094.5 11071.1 13960.7 20887.4 36504.5 42717
Europe and Central Asia...................................... 3480.9 4711.7 7011.5 8529.7 9630.7 11133.9
Latin America and the Caribbean.............................. 8155.1 7937.5 12288.8 13631.3 16139.3 18875
Middle East and North Africa................................. 1965.7 1596.7 1211.2 1582.8 1716.8 2107
South Asia................................................... 486.9 540.3 456.5 622.8 840.9 845
Sub-Saharan Africa........................................... 2504 854.4 1881.4 1822.4 1781.9 2240.5
</TABLE>
Source:
FINANCIAL FLOWS AND THE DEVELOPING COUNTRIES, THE WORLD BANK, FEBRUARY 1995.
NOTE: The data in the chart above is based on the World Bank's definition of
developing countries which does not correspond country-to-country with the
emerging markets in which the Fund may invest. Certain countries that may be
viewed as emerging markets by G.T. Global (for example, Hong Kong and Singapore)
are not considered to be developing countries by the World Bank.
Statement of Additional Information Page 46
<PAGE>
G.T. LATIN AMERICA GROWTH FUND
APPENDIX
- --------------------------------------------------------------------------------
INFORMATION ON LATIN AMERICA
STRUCTURAL CHANGE IN LATIN AMERICAN POLITICS
<TABLE>
<CAPTION>
1981 1995
- -------------------------------------------------- -----------------------------------
POLITICAL ECONOMIC POLITICAL ECONOMIC
LEADERSHIP POLICIES LEADERSHIP POLICIES
- --------------------------- --------------------- ------------------ ---------------
<S> <C> <C> <C>
Mexico
Portillo-Civilian Regulated/Closed Zedillo-Civilian Free Market
Chile
Pinochet-Military Free Market (in Frei-Civilian Free Market
progress of
deregulation)
Argentina
Viola-Military Regulated/Closed Menem-Civilian Free Market
Brazil
Figueyredo-Military Regulated/Closed Franco-Civilian Free Market
</TABLE>
Source:
G.T. CAPITAL MANAGEMENT, INC.
Statement of Additional Information Page 47
<PAGE>
G.T. LATIN AMERICA GROWTH FUND
DESCRIPTION OF DEBT RATINGS
- --------------------------------------------------------------------------------
DESCRIPTION OF COMMERCIAL PAPER RATINGS
MOODY'S INVESTORS SERVICE, INC. ("Moody's") employs the designations "Prime-1,"
"Prime-2" and "Prime-3" to indicate commercial paper having the highest capacity
for timely repayment. Issuers rated Prime-1 have a superior capacity for
repayment of short-term promissory obligations. Prime-1 repayment capacity will
normally be evidenced by the following characteristics: leading market positions
in well-established industries; high rates of return on funds employed;
conservative capitalization structures with moderate reliance on debt and ample
asset protections; broad margins in earnings coverage of fixed financial charges
and high internal cash generation; and well-established access to a range of
financial markets and assured sources of alternate liquidity. Issuers rated
Prime-2 have a strong capacity for repayment of short-term promissory
obligations. This will normally be evidenced by many of the characteristics
cited above, but to a lesser degree. Earnings trends and coverage ratios, while
sound, will be more subject to variation. Capitalization characteristics, while
still appropriate, may be more affected by external conditions. Ample alternate
liquidity is maintained. Issuers rated Prime-3 have an acceptable ability for
repayment of senior short-term obligations. The effect of industry
characteristics and market compositions may be more pronounced. Variability in
earnings and profitability may result in changes in the level of debt protection
measurements and may require relatively high financial leverage. Adequate
alternate liquidity is maintained.
STANDARD & POOR'S RATINGS GROUP'S ("S&P") ratings of commercial paper are graded
into four categories ranging from "A" for the highest quality obligations to "D"
for the lowest. A -- Issues assigned its highest rating are regarded as having
the greatest capacity for timely payment. Issues in this category are delineated
with numbers 1, 2, and 3 to indicate the relative degree of safety. A-1 -- This
designation indicates that the degree of safety regarding timely payment is
either overwhelming or very strong. Those issues determined to possess
overwhelming safety characteristics will be denoted with a plus (++) sign
designation. A-2 -- Capacity for timely payments on issues with this designation
is strong. However, the relative degree of safety is not as high as for issues
designated "A-1." A-3-Issues carrying this designation have a satisfactory
capacity for timely payment. They are, however, somewhat more vulnerable to the
adverse effects of changes in circumstances than obligations carrying the higher
designations.
DESCRIPTION OF BOND RATINGS
Moody's rates the long-term debt securities issued by various entities from
"Aaa" to "C." Ratings are as follows:
Aaa -- Best quality. These securities carry the smallest degree of
investment risk and are generally referred to as "gilt edged." Interest
payments are protected by a large, or by an exceptionally stable margin and
principal is secure. While the various protective elements are likely to
change, such changes as can be visualized are most unlikely to impair the
fundamentally strong position of such issues.
Aa -- High quality by all standards. Together with the Aaa group they
comprise what are generally known as high grade bonds. They are rated lower
than the best bond because margins of protection may not be as large as in
Aaa securities, fluctuation of protective elements may be of greater
amplitude, or there may be other elements present which make the long-term
risks appear somewhat larger than the Aaa securities.
A -- Upper medium grade obligations. These bonds possess many favorable
investment attributes. Factors giving security to principal and interest are
considered adequate, but elements may be present which suggest a
susceptibility to impairment sometime in the future.
Baa -- Medium grade obligations (i.e., they are neither highly protected
nor poorly secured). Interest payments and principal security appear
adequate for the present but certain protective elements may be lacking or
may be characteristically unreliable over any great length of time. Such
bonds lack outstanding investment characteristics and, in fact, have
speculative characteristics as well.
Ba -- These bonds are judged to have speculative elements; their future
cannot be considered as well assured. Often the protection of interest and
principal payments may be very moderate and thereby not well safeguarded
during other good and bad times over the future. Uncertainty of position
characterizes bonds in this class.
Statement of Additional Information Page 48
<PAGE>
G.T. LATIN AMERICA GROWTH FUND
B -- These bonds generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance
of other terms of the contract over any long period of time may be small.
Caa -- These bonds are of poor standing. Such issues may be in default
or there may be present elements of danger with respect to principal or
interest.
Ca -- These bonds represent obligations which are speculative in a high
degree. Such issues are often in default or have other marked shortcomings.
C -- These bonds are the lowest rated class of bonds and issues so rated
can be regarded as having extremely poor prospects of ever attaining any
real investment standing.
S&P rates the long-term securities debt of various entities in categories
ranging from "AAA" to "D" according to quality. Investment grade ratings are as
follows:
AAA -- Highest rating. Capacity to pay interest and repay principal is
extremely strong.
AA -- High grade. Very strong capacity to pay interest and repay
principal. Generally, these bonds differ from AAA issues only in a small
degree.
A -- Have a strong capacity to pay interest and repay principal,
although they are somewhat more susceptible to the adverse effects of change
in circumstances and economic conditions, than debt in higher rated
categories.
Speculative grade ratings are as follows:
BBB -- Regarded as having adequate capacity to pay interest and repay
principal. These bonds normally exhibit adequate protection parameters, but
adverse economic conditions or changing circumstances are more likely to
lead to a weakened capacity to pay interest and repay principal than for
debt in higher rated categories.
BB -- Have less near-term vulnerability to default than other
speculative issues. However, these bonds face major ongoing uncertainties or
exposure to adverse business, financial, or economic conditions which could
lead to inadequate capacity to meet timely interest and principal payments.
This rating category is also used for debt subordinated to senior debt that
is assigned an actual or implied 'BBB-'rating.
B -- Have greater vulnerability to default but currently have the
capacity to meet interest payments and principal repayments. Adverse
business, financial, or economic conditions will likely impair capacity or
willingness to pay interest and repay principal. This rating category is
also used for debt subordinated to senior debt that is assigned an actual or
implied 'BB' or 'BB-' rating.
CCC -- Have a currently identifiable vulnerability to default and are
dependent upon favorable business, financial, and economic conditions to
meet timely payment of interest and repayment of principal. In the event of
adverse business, financial, or economic conditions, these bonds are not
likely to have the capacity to pay interest and repay principal. The 'CCC'
rating category is also used for debt subordinated to senior debt that is
assigned an actual or implied 'B' or 'B-' rating.
CC -- This rating typically is applied to debt subordinated to senior
debt that is assigned an actual or implied 'CCC' rating.
C -- This rating typically is applied to debt subordinated to senior
debt that is assigned an actual or implied 'CCC-' debt rating. This rating
may be used to cover a situation where a bankruptcy petition has been filed,
but debt service payments are continued.
CI -- This rating is reserved for income bonds on which no interest is
being paid.
D -- Are in payment default. This rating category is used when interest
payments or principal payments are not made on the date due even if the
applicable grace period has not expired, unless S&P believes that such
payments will be made during such grace period. This rating also will be
used up on the filing of a bankruptcy petition if debt service payments are
jeopardized.
Statement of Additional Information Page 49
<PAGE>
G.T. LATIN AMERICA GROWTH FUND
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
The audited financial statements of G.T. Latin America Growth Fund at October
31, 1994 and for the period then ended appear on the following pages.
Statement of Additional Information Page 50
<PAGE>
G.T. LATIN AMERICA GROWTH FUND
NOTES
- --------------------------------------------------------------------------------
Statement of Additional Information Page 66
<PAGE>
G.T. LATIN AMERICA GROWTH FUND
NOTES
- --------------------------------------------------------------------------------
Statement of Additional Information Page 67
<PAGE>
G.T. LATIN AMERICA GROWTH FUND
REPORT OF
INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
ANNUAL REPORT
To the Shareholders and Board of Directors of
G.T. Investment Funds, Inc.:
We have audited the accompanying statement of assets and liabilities of G.T.
Latin America Growth Fund, one of the funds organized as a series of G.T.
Investment Funds, Inc., including the schedule of portfolio investments, as of
October 31, 1994, and the related statement of operations for the year then
ended, the statements of changes in net assets for each of the two years in the
period then ended, and the financial highlights for each of the three years in
the period then ended and for the period from August 13, 1991 (commencement of
operations) to October 31, 1991. These financial statements and the financial
highlights are the responsibility of the Fund's management. Our responsibility
is to express an opinion on these financial statements and the financial
highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and the financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
October 31, 1994 by correspondence with the custodian and brokers. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and the financial highlights referred
to above present fairly, in all material respects, the financial position of
G.T. Latin America Growth Fund as of October 31, 1994, the results of its
operations for the year then ended, the changes in its net assets for each of
the two years in the period then ended and the financial highlights for each of
the three years in the period then ended and for the period from August 13, 1991
(commencement of operations) to October 31, 1991, in conformity with generally
accepted accounting principles.
COOPERS & LYBRAND L.L.P.
BOSTON, MASSACHUSETTS
DECEMBER 16, 1994
Statement of Additional Information Page 51
<PAGE>
G.T. LATIN AMERICA GROWTH FUND
PORTFOLIO OF INVESTMENTS
October 31, 1994
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Equity Market % of Net
Investments Country Shares Value Assets(a)
<S> <C> <C> <C> <C>
- ----------------------------------------------------------------------------
Materials/Basic Industries (19.5%)
- -----------------------------------------------
Cementos
Mexicanos, S.A.
de C.V. - Cemex
"B" MEX 1,621,750 $15,073,958 2.7
CEMENT
Companhia Vale do
Rio Doce - CVRD
(Preferred) BRZL 51,300,000 11,132,349 2.0
METALS - NON-FERROUS
Kimberly-Clark de
Mexico, S.A. de
C.V. "A" MEX 395,900 7,867,244 1.4
PAPER/PACKAGING
Compania
Siderurgica
Nacional S.A.
(CSN): (c) BRZL -- -- 1.4
METALS - STEEL
Common -- 112,958,000 5,192,856 --
144A ADR (b)(d) -- 57,500 2,630,625 --
Grupo Industrial
Minera Mexico,
S.A. de C.V. "B" MEX 1,824,924 6,912,591 1.3
METALS - NON-FERROUS
Companhia Cimento
Portland Itau
(Preferred) (c) BRZL 14,730,000 6,457,464 1.2
CEMENT
La Cementos
Nacional 144A
GDR (b)(c)(d) ECDR 16,800 5,880,000 1.1
CEMENT
Grupo Fernandez
Editores, S.A.
de C.V. "BCP"
(c) MEX 3,345,000 5,789,423 1.1
PAPER/PACKAGING
Compania
Siderurgica de
Tubarao (CST)
S.A. "B" 144A
ADR (b)(d) BRZL 134,500 4,875,625 0.9
METALS - STEEL
<CAPTION>
Equity Market % of Net
Investments Country Shares Value Assets(a)
<S> <C> <C> <C> <C>
- ----------------------------------------------------------------------------
Internacional de
Ceramica, S.A.
de C.V. "B": (c) MEX -- -- 0.7
BUILDING MATERIALS & COMPONENT
ADR (b) -- 70,000 $2,205,000 --
Common -- 302,000 1,830,303 --
Cospia S.A.
(Preferred "B") BRZL 1,268,000 3,861,090 0.7
METALS - STEEL
IRSA S.A. Class B
(c) ARG 1,067,000 3,513,852 0.6
FOREST PRODUCTS
C.A. Venezolana
de Pulpa y Papel
S.A.C.A.-
Venepal: VENZ -- -- 0.6
FOREST PRODUCTS
144A GDR (b)(d) -- 680,890 2,510,782 --
Common -- 916,738 679,465 --
Paranapanema
S.A. (Preferred) (c) BRZL 190,900,000 3,123,613 0.6
METALS - NON-FERROUS
Empaques
Ponderosa, S.A.
de C.V. "B" MEX 770,000 3,105,128 0.6
PAPER/PACKAGING
Dixie Lakekla
S.A. (Preferred) (c) BRZL 3,900,000 2,841,871 0.5
PAPER/PACKAGING
Corporacion
Cementera
Argentina S.A.
(Corcemar) (c) ARG 315,792 2,623,435 0.5
CEMENT
Acindar Industria ARG 2,070,000 2,258,332 0.4
METALS - STEEL
Venezolana de
Cementos,
S.A.C.A. "A" VENZ 1,052,007 1,738,901 0.3
CEMENT
Venezolana de
Prerreducidos
Caroni C.A. -
Venprecar 144A
GDR (b)(d) VENZ 270,500 1,656,813 0.3
METALS - STEEL
Cementos Argos
S.A. COL 135,989 1,299,465 0.2
CEMENT
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 52
<PAGE>
G.T. LATIN AMERICA GROWTH FUND
<TABLE>
<CAPTION>
Equity Market % of Net
Investments Country Shares Value Assets(a)
- ----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Cementos Paz del
Rio, S.A. 144A
ADR (b)(d) COL 35,000 $866,250 0.2
CEMENT
Caemi Mineracao E
Metal
(Preferred) (c) BRZL 4,630,000 735,095 0.1
METALS - STEEL
Corimon C.A.
Sponsored ADR
(b) VENZ 31,700 317,000 0.1
BUILDING MATERIALS & COMPONENT
Papelera
Inversora S.A. ARG 3,616 11,763 --
PAPER/PACKAGING
--------------
106,990,293
--------------
Services (13.8%)
- -----------------------------------------------
Telecomunicacoes
Brasileiras S.A.
- Telebras: BRZL -- -- 3.9
TELEPHONE NETWORKS
Preferred -- 443,600,000 21,391,611 --
Preferred New -- 10,112,761 438,899 --
Telefonos de
Mexico, S.A. de
C.V. "L" ADR (b) MEX 240,000 13,200,000 2.4
TELEPHONE NETWORKS
Grupo Televisa,
S.A. de C.V. GDR
(b) MEX 262,400 11,644,000 2.1
BROADCASTING & PUBLISHING
Compania de
Telefonos de
Chile ADR (b) CHLE 74,000 6,965,250 1.3
TELEPHONE NETWORKS
Grupo Situr, S.A.
de C.V. "B": MEX -- -- 1.1
LEISURE & TOURISM
144A ADR (b)(d) -- 167,169 5,015,070 --
Common -- 427,000 1,293,939 --
Grupo Casa Autrey
S.A. de C.V.
Sponsored ADR
(b) MEX 158,300 4,828,150 0.9
WHOLESALE & INTERNATIONAL TRADE
Nadro, S.A. de
C.V. "L" (c) MEX 556,500 3,891,608 0.7
WHOLESALE & INTERNATIONAL TRADE
<CAPTION>
Equity Market % of Net
Investments Country Shares Value Assets(a)
<S> <C> <C> <C> <C>
- ----------------------------------------------------------------------------
Compania Peruana
de Telefonos "B"
(c) PERU 2,568,952 $3,575,703 0.7
TELEPHONE NETWORKS
Tele 2000 (c) PERU 704,441 1,951,492 0.4
WIRELESS COMMUNICATIONS
Telecom Argentina
S.A. "B" ARG 250,000 1,521,369 0.3
TELEPHONE NETWORKS
--------------
75,717,091
--------------
Finance (13.3%)
- -----------------------------------------------
Banco Bradesco de
Investimento
S.A. (Preferred) BRZL 1,752,982,287 16,408,247 2.9
BANKS-REGIONAL
Grupo Financiero
Bancrecer, S.A.
de C.V. "B" MEX 846,000 10,883,129 2.0
BANKS-REGIONAL
Seguros La
Comercial
America, S.A. de
C.V. "B" MEX 13,686,000 8,374,301 1.5
INSURANCE - MULTI-LINE
Banco Nacional
S.A. (Preferred) BRZL 288,648,798 7,859,182 1.4
BANKS-REGIONAL
Grupo Financiero
Banamex Accival,
S.A. de C.V. "C" MEX 764,000 5,253,613 1.0
BANKS-REGIONAL
Uniao Bancos
Brasileiros -
Unibanco
(Preferred "A") BRZL 155,670,000 4,924,628 0.9
BANKS-REGIONAL
Grupo Financiero
Bancomer, S.A.
de C.V. "C" MEX 4,090,000 4,743,065 0.9
BANKS-REGIONAL
Banco de Credito PERU 1,762,080 4,190,893 0.8
BANKS-REGIONAL
Banco Wiese: (c) PERU -- -- 0.7
BANKS-REGIONAL
Common -- 592,769 3,124,053 --
ADR (b) -- 22,500 478,125 --
Banco do Brasil
S.A. (Preferred) BRZL 136,800,000 2,755,450 0.5
BANKS-REGIONAL
Banco de Bogota COL 421,512 2,517,391 0.5
BANKS-REGIONAL
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 53
<PAGE>
G.T. LATIN AMERICA GROWTH FUND
<TABLE>
<CAPTION>
Equity Market % of Net
Investments Country Shares Value Assets(a)
- ----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Pacifico Peruano
Suisse PERU 45,842 $1,306,291 0.2
INSURANCE - MULTI-LINE
--------------
72,818,368
--------------
Retailers-Other (12.7%)
- -----------------------------------------------
Casa Anglo S.A.
(Preferred) (c) BRZL 81,848,037 21,334,796 3.9
Lojas Americanas
S.A. (Preferred)
(c) BRZL 564,725,469 17,396,756 3.2
Cifra, S.A. de
C.V.: MEX -- -- 1.7
"C" -- 2,675,000 7,217,512 --
"B" -- 825,000 2,350,962 --
Mesbla S.A.
(Preferred) (c) BRZL 37,742,000 7,289,036 1.3
Grupo Elektra,
S.A. de C.V.
"CPO" (c) MEX 644,000 7,177,448 1.3
Gran Cadena de
Almacenes
Colombianos COL 1,715,678 3,278,888 0.6
Carulla & Cia.
S.A. Class B
144A ADR (b)(d) COL 132,500 1,987,500 0.4
Farmacias
Benavides, S.A.
de C.V. "B" MEX 485,000 1,808,857 0.3
--------------
69,841,755
--------------
Consumer Non-Durables (11.0%)
- -----------------------------------------------
Coteminas S.A.
(Preferred) BRZL 40,781,300 17,394,384 3.2
TEXTILES & APPAREL
Embotelladora
Andina S.A. ADR
(b) CHLE 435,100 12,019,638 2.2
BEVERAGES - NON ALCOHOLIC
Fomento Economico
Mexicano, S.A.
de C.V. - Femsa
"B" MEX 2,151,000 9,463,899 1.7
BEVERAGES - ALCOHOLIC
Grupo Industrial
Maseca, S.A. de
C.V. "B" MEX 5,222,000 8,520,746 1.6
FOOD
Cia. Souza Cruz
Industria E
Comercio S.A. BRZL 705,870 6,690,711 1.2
TOBACCO
Jugos Del Valle
S.A. Series B
(c) MEX 550,000 3,044,872 0.6
BEVERAGES - NON ALCOHOLIC
Bavaria (c) COL 478,317 1,656,855 0.3
BEVERAGES - ALCOHOLIC
<CAPTION>
Equity Market % of Net
Investments Country Shares Value Assets(a)
<S> <C> <C> <C> <C>
- ----------------------------------------------------------------------------
Chocolates COL 89,896 $955,655 0.2
FOOD
Embotella Del
Valle de Anahuac
S.A. - Emvasa
"B" (c) MEX 46,000 219,814 --
BEVERAGES - NON ALCOHOLIC
--------------
59,966,574
--------------
Conglomerate (10.9%)
- -----------------------------------------------
Grupo Industrial
Alfa, S.A. de
C.V. "A" MEX 1,463,000 20,035,256 3.7
Grupo Carso, S.A.
de C.V. "A1" (c) MEX 1,222,500 13,019,340 2.4
Desc Sociedad de
Fomento
Industrial, S.A.
de C.V.: MEX -- -- 1.9
"B" -- 1,193,500 8,833,013 --
"A" -- 226,000 1,580,420 --
Grupo Sidek, S.A.
de C.V.: MEX -- -- 1.9
"B" -- 1,365,000 5,846,591 --
"A" -- 1,000,000 4,283,217 --
"L" -- 58,801 253,571 --
Commercial Del
Plata ARG 1,179,840 3,979,642 0.7
Mirgor 144A GDR
(b)(d) ARG 200,000 1,825,000 0.3
--------------
59,656,050
--------------
Energy (5.3%)
- -----------------------------------------------
Companhia
Energetica de
Minas Gerais -
Cemig
(Preferred) BRZL 98,917,000 10,079,220 1.8
ELECTRICAL & GAS UTILITIES
C.A. La
Electricidad de
Caracas VENZ 3,265,055 6,376,460 1.2
ELECTRICAL & GAS UTILITIES
BR Distribuidora
S.A. BRZL 105,030,000 5,948,382 1.1
ENERGY SOURCES
Chilegener S.A.
ADR (b) CHLE 128,000 3,616,000 0.7
ELECTRICAL & GAS UTILITIES
Electricidad de
Argentina 144A
ADR (b)(d) ARG 110,857 2,023,140 0.4
ELECTRICAL & GAS UTILITIES
Companhia
Brasileira de
Petroleo
Ipiranga S.A.
(Preferred) BRZL 27,800,000 500,664 0.1
ENERGY SOURCES
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 54
<PAGE>
G.T. LATIN AMERICA GROWTH FUND
<TABLE>
<CAPTION>
Equity Market % of Net
Investments Country Shares Value Assets(a)
- ----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Centrais
Electricas
Brasileiras S.A.
- Electrobras
(Preferred B)
New BRZL 692,704 $265,099 --
ELECTRICAL & GAS UTILITIES
--------------
28,808,965
--------------
Capital Goods (4.7%)
- -----------------------------------------------
Iochpe Maxion
(Preferred) (c) BRZL 22,740,000 15,761,730 2.8
MACHINERY & ENGINEERING
Bardella S.A. -
Indust Mec
(Preferred) (c) BRZL 14,135 3,600,741 0.7
MACHINERY & ENGINEERING
Bufete
Industrial, S.A.
de C.V. ADR (b) MEX 80,100 3,244,050 0.6
CONSTRUCTION
Grupo Tribasa,
S.A. de C.V.
Sponsored ADR
(b)(c) MEX 52,600 1,650,325 0.3
CONSTRUCTION
Confab Industrial
S.A. (Preferred)
(c) BRZL 692,000 1,229,858 0.2
MACHINERY & ENGINEERING
John Deere S.A.
de C.V. Series A MEX 190,000 503,788 0.1
MACHINERY & ENGINEERING
--------------
25,990,492
--------------
Consumer Durables (1.7%)
- -----------------------------------------------
Brasmotor S.A.
(Preferred) (c) BRZL 16,390,000 6,796,801 1.2
APPLIANCES & HOUSEHOLD DURABLES
Continental 2001
S.A. (Preferred) BRZL 63,472,000 1,504,076 0.3
APPLIANCES & HOUSEHOLD DURABLES
<CAPTION>
Equity Market % of Net
Investments Country Shares Value Assets(a)
<S> <C> <C> <C> <C>
- ----------------------------------------------------------------------------
Consorcio Grupo
Dina, S.A. de
C.V. ADR (b) MEX 78,000 $1,004,250 0.2
AUTOMOBILES
--------------
9,305,127
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
Total Equity Investments
(cost $436,538,340)........................... 509,094,715 92.9
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
<CAPTION>
Fixed Income Principal
Investment Currency Amount
<S> <C> <C> <C> <C>
- -----------------------------------------------
<CAPTION>
Government Bond (0.8%)
- ----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Venezuela
- -----------------------------------------------
Republic of
Venezuela, Debt
Conversion Bond,
5.75% due
12/18/07 (e) USD 9,500,000 4,595,625 0.8
<CAPTION>
Corporate Bond (0.0%)
- ----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Peru
- -----------------------------------------------
Tele 2000 S.A.,
Conv. Bond,
9.75% due
4/14/97 144A (d) USD 251,000 243,470 --
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
Total Fixed Income Investments (cost
$5,244,482)................................... 4,839,095 0.8
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
<CAPTION>
Short-Term
Investment
- -----------------
<S> <C> <C> <C> <C>
Repurchase Agreement (7.5%)
- -----------------------------------------------
Dated October 31, 1994 with State Street Bank &
Trust Company, due November 1, 1994, for an
effective yield of 4.7% collateralized by
$43,895,000 Federal National Mortgage
Association Medium Term Note, 5.22% due
7/10/98. (Market value of $41,830,618,
including accrued interest.) (cost
$41,129,369)..................................
41,129,369 7.5
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
Total Investments (cost $482,912,191)*......... 555,063,179 101.2
Liabilities Less Other Assets.................. (6,430,069) (1.2 )
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
Net Assets..................................... $548,633,110 100.0
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
<FN>
- --------------------------------------------------------------------------------
(a) Percentages indicated are based on net assets of $548,633,110.
(b) U.S. currency denominated.
(c) Non-income producing security.
(d) Security exempt from registration under Rule 144A of the Securities Act of
1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers.
(e) The coupon rate shown on floating rate note represents the rate at period
end.
Abbreviations:
ADR -- American Depository Receipt
GDR -- Global Depository Receipt
* For Federal income tax purposes, cost is $483,430,419 and appreciation
(depreciation) of securities is as follows:
Unrealized appreciation: $ 91,135,609
Unrealized depreciation: (19,502,849)
-------------
Net unrealized
appreciation: $ 71,632,760
-------------
-------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 55
<PAGE>
G.T. LATIN AMERICA GROWTH FUND
WRITTEN COVERED CALL OPTION OUTSTANDING
OCTOBER 31, 1994
<TABLE>
<CAPTION>
Expiration Number of Market
Strike Date Contracts Currency Value
------ ---------- --------- -------- ------
<S> <C> <C> <C> <C> <C>
Telefonos de Mexico, S.A. de C.V. -- Telmex (cost $66,750)....... 70 11/15/94 300 USD $1,875
------
------
<FN>
- ----------------
See Notes 1 and 5 of the financial statements.
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
The Fund's Portfolio of Investments at October 31, 1994, was concentrated in the
following countries:
<TABLE>
<CAPTION>
Percentage of Net Assets (a)
-----------------------------------------------------------------
Fixed
Equity Income Short-Term Other Total
----------- ----------- --------------- ----------- ---------
<S> <C> <C> <C> <C> <C>
Argentina................... 3.2 3.2
Brazil...................... 38.0 38.0
Chile....................... 4.2 4.2
Colombia.................... 2.4 2.4
Ecuador..................... 1.1 1.1
Mexico...................... 38.7 38.7
Peru........................ 2.8 2.8
Venezuela................... 2.5 0.8 3.3
United States............... 7.5 (1.2) 6.3
-- --
--- --- ---------
Total....................... 92.9 0.8 7.5 (1.2) 100.0
-- --
-- --
--- --- ---------
--- --- ---------
<FN>
- ----------------
(a) Percentages indicated are based on net assets of $548,633,110.
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 56
<PAGE>
G.T. LATIN AMERICA GROWTH FUND
STATEMENT OF ASSETS
AND LIABILITIES
October 31, 1994
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Assets:
Investments in securities, at value (cost $482,912,191) (Note 1)..................................... $ 555,063,179
U.S. currency............................................................................
$ 38
Foreign currency (cost $5,399,742).......................................................
5,515,730 5,515,768
----------
Receivable for securities sold....................................................................... 17,000,975
Receivable for Fund shares sold...................................................................... 5,398,807
Dividends and dividend withholding tax reclaims receivable........................................... 448,646
Interest receivable.................................................................................. 202,962
Unamortized deferred organizational expenses (Note 1)................................................ 52,135
-------------
Total assets......................................................................................... 583,682,472
-------------
Liabilities:
Payable for securities purchased..................................................................... 26,659,500
Payable for Fund shares repurchased.................................................................. 7,303,307
Payable for investment management and administration fees (Note 2)................................... 413,628
Payable for service and distribution expenses (Note 2)............................................... 316,128
Payable for printing and postage expenses............................................................ 103,796
Payable for registration fees........................................................................ 70,945
Payable for transfer agent fees (Note 2)............................................................. 68,266
Payable for professional fees........................................................................ 62,225
Payable for custodian fees........................................................................... 41,836
Payable for Directors' fees (Note 2)................................................................. 2,525
Payable for Written Options (Premiums Received $66,750).............................................. 1,875
Accrued expenses..................................................................................... 5,331
-------------
Total liabilities.................................................................................... 35,049,362
-------------
Net assets............................................................................................. $ 548,633,110
-------------
-------------
Class A:
Net asset value and redemption price per share
($336,959,883 DIVIDED BY 12,906,277 shares outstanding)............................................. $ 26.11
-------------
-------------
Maximum offering price per share
(100/95.25 of $26.11)*............................................................................... $ 27.41
-------------
-------------
Class B:+
Net asset value and offering price per share
($211,673,227 DIVIDED BY 8,160,109 shares outstanding).............................................. $ 25.94
-------------
-------------
Net assets consist of:
Paid in capital (Note 4)............................................................................. $ 442,264,774
Accumulated net realized gain on investments and foreign currency conversions........................ 33,997,752
Net unrealized appreciation of investments, written options, dividends and dividend withholding tax
reclaims receivable, interest receivable, securities purchased and sold and foreign currency 72,370,584
conversions.........................................................................................
-------------
Total -- representing net assets applicable to capital shares outstanding............................ $ 548,633,110
-------------
-------------
<FN>
- ----------------
* On sales of $50,000 or more, the offering price is reduced.
+ Redemption price per share is equal to the net asset value per share less
any applicable contingent deferred sales charge.
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 57
<PAGE>
G.T. LATIN AMERICA GROWTH FUND
STATEMENT OF OPERATIONS
For the year ended October 31, 1994
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Investment income (Note 1):
Dividend income (net of foreign tax withheld of $576,575)............................................ $ 5,653,787
Interest income...................................................................................... 865,886
------------
Total investment income.............................................................................. 6,519,673
------------
Expenses:
Investment management and administration fees (Note 2)............................................... 3,601,031
Service and distribution expenses (Note 2):
Class A.............................................................................. $ 1,263,153
Class B.............................................................................. 1,204,826 2,467,979
------------
Transfer agent fees (Note 2)......................................................................... 1,170,802
Custodian fees....................................................................................... 511,485
Registration fees.................................................................................... 164,064
Printing and postage expenses........................................................................ 138,640
Professional fees.................................................................................... 112,831
Amortization of organizational expenses (Note 1)..................................................... 30,200
Director's fees (Note 2)............................................................................. 5,532
Other................................................................................................ 19,111
------------
Total expenses....................................................................................... 8,221,675
------------
Net investment loss.................................................................................... (1,702,002)
------------
Net realized and unrealized gain on investments and foreign currencies (Note 1):
Net realized gain on investments....................................................... 52,869,883
Net realized loss on foreign currency conversions...................................... (16,414,110)
------------
Net realized gain.................................................................................... 36,455,773
Change in unrealized appreciation of dividends and dividend withholding tax reclaims
receivable, interest receivable, securities purchased and sold, and foreign
currency conversions.................................................................. 624,742
Change in unrealized appreciation of investments....................................... 42,935,159
------------
Net unrealized appreciation.......................................................................... 43,559,901
------------
Net realized and unrealized gain on investments and foreign currencies................................. 80,015,674
------------
Net increase in net assets resulting from operations................................................... $ 78,313,672
------------
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 58
<PAGE>
G.T. LATIN AMERICA GROWTH FUND
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
OCTOBER 31, 1994 OCTOBER 31, 1993
---------------- ----------------
<S> <C> <C>
Increase in net assets
Operations:
Net investment income (loss).................................................................
$ (1,702,002) $ 1,329,751
Net realized gain on investments and foreign currency conversions............................
36,455,773 1,459,001
Change in unrealized appreciation (depreciation) of investments, dividends and dividend
withholding tax reclaims receivable, interest receivable, securities purchased and sold, and
foreign currency conversions................................................................
43,559,901 29,665,756
---------------- ----------------
Net increase in net assets resulting from operations.........................................
78,313,672 32,454,508
---------------- ----------------
Class A:+
Distributions to shareholders from: (Note 1)
Net investment income........................................................................
(1,602,016) (721,128)
Net realized gain on investments and foreign currency........................................
(1,208,111) (6,390,094)
Class B:++
Distributions to shareholders from: (Note 1)
Net investment income........................................................................
(278,582) 0
Net realized gain on investments and foreign currency........................................
(226,277) 0
Capital share transactions: (Note 4)
Increase from capital shares sold and reinvested.............................................
1,159,589,487 66,581,343
Decrease from capital shares repurchased.....................................................
(828,810,299) (43,154,222)
---------------- ----------------
Net increase from capital share transactions.................................................
330,779,188 23,427,121
---------------- ----------------
Total increase in net assets...................................................................
405,777,874 48,770,407
Net assets:
Beginning of year............................................................................
142,855,236 94,084,829
---------------- ----------------
End of year..................................................................................
$ 548,633,110* $ 142,855,236**
----------------
---------------- ----------------
----------------
<FN>
- ----------------
* Including undistributed net investment income of $0.
** Including undistributed net investment income of $1,142,192.
+ All capital shares issued and outstanding as of March 31, 1993 were
reclassified as Class A shares.
++ Commencing April 1, 1993, the Fund began offering Class B shares.
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 59
<PAGE>
G.T. LATIN AMERICA GROWTH FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout each period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
CLASS A+
--------------------------------------------- CLASS B++
AUGUST 13, 1991 ----------------------------
(COMMENCEMENT APRIL 1, 1993
YEAR ENDED OCTOBER 31, OF OPERATIONS) YEAR ENDED TO
--------------------------- TO OCTOBER 31, OCTOBER 31,
1994(A) 1993(A) 1992 OCTOBER 31, 1991 1994(A) 1993(A)
-------- -------- ------- ---------------- ----------- --------------
<S> <C> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period............ $ 19.78 $ 15.59 $ 16.45 $ 14.29 $ 19.75 $ 16.26
-------- -------- ------- ---------------- ----------- --------------
Income from investment operations:
Net investment income......................... (0.08) 0.18* 0.25* 0.01* (0.22) (0.07)
Net realized and unrealized gain (loss) on 6.75 5.21 (0.98) 2.15 6.74 3.56
investments..................................
-------- -------- ------- ---------------- ----------- --------------
Net increase (decrease) from investment 6.67 5.39 (0.73) 2.16 6.52 3.49
operations...................................
-------- -------- ------- ---------------- ----------- --------------
Distributions:
Net investment income......................... (0.19) (0.12) (0.13) (0.00) (0.18) (0.00)
Net realized gain on investments.............. (0.15) (1.08) (0.00) (0.00) (0.15) (0.00)
-------- -------- ------- ---------------- ----------- --------------
Total distributions......................... (0.34) (1.20) (0.13) (0.00) (0.33) (0.00)
-------- -------- ------- ---------------- ----------- --------------
Net asset value, end of period.................. $ 26.11 $ 19.78 $ 15.59 $ 16.45 $ 25.94 $ 19.75
-------- -------- ------- ---------------- ----------- --------------
-------- -------- ------- ---------------- ----------- --------------
Total investment return(d)...................... 34.10% 37.1% (4.5)% 15.1%(b) 33.33% 21.5%(b)
Ratios and supplemental data:
Net assets, end of period (in 000's)............ $336,960 $129,280 $94,085 $125,038 $211,673 $13,576
Ratio of net investment income (loss) to average
net assets..................................... (0.29)% 1.3%* 1.3%* 1.2%*(c) (0.79)% (0.7)%(c)
Ratio of expenses to average net assets......... 2.04% 2.4%* 2.4%* 2.4%*(c) 2.54% 2.9%(c)
Portfolio turnover rate+++...................... 155% 112% 159% none 155% 112%
<FN>
- ------------------
+ All capital shares issued and outstanding as of March 31, 1993 were
reclassified as Class A shares.
++ Commencing April 1, 1993, the Fund began offering Class B shares.
+++ Portfolio turnover is calculated on the basis of the Fund as a whole
without distinguishing between the classes of shares issued.
* Includes reimbursement by G.T. Capital Management, Inc. of Fund operating
expenses of $0.02, $0.04 and $0.01 for the years ended October 31, 1993 and
1992 and for the period from August 13, 1991 to October 31, 1991,
respectively. Without such reimbursements, the expense ratios would have
been 2.49%, 2.62% and 3.42% and the ratios of net investment income to
average net assets would have been 1.25%, 1.07% and 0.15% for the years
ended October 31, 1993 and 1992 and for the period from August 13, 1991 to
October 31, 1991, respectively.
(a) These selected per share data were calculated based upon weighted average
shares outstanding during the period.
(b) Not annualized.
(c) Annualized.
(d) Total investment return does not include sales charges.
</TABLE>
Statement of Additional Information Page 60
<PAGE>
G.T. LATIN AMERICA GROWTH FUND
NOTES TO
FINANCIAL STATEMENTS
October 31, 1994
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
G.T. Latin America Growth Fund ("Fund") is a separate series of G.T. Investment
Funds, Inc. ("Company"). The Company is organized as a Maryland corporation and
is registered under the Investment Company Act of 1940, as amended ("1940 Act"),
as a non-diversified, open-end management investment company. The Company has
eleven series of shares in operation, each series corresponding to a distinct
portfolio of investments. The following is a summary of significant accounting
policies consistently followed by the Fund in the preparation of the financial
statements. The policies are in conformity with generally accepted accounting
principles.
(A) PORTFOLIO VALUATION
The Fund calculates the net asset value of and completes orders to purchase,
exchange or repurchase Fund shares on each business day, with the exception of
those days on which the New York Stock Exchange is closed.
Equity securities are valued at the last sale price on the exchange on which
such securities are traded, or, in the principal over-the-counter market in
which such securities are traded as of the close of business on the day the
securities are being valued or, lacking any sales, at the last available bid
price. In cases where securities are traded on more than one exchange, the
securities are valued on the exchange determined by G.T. Capital Management,
Inc. ("G.T. Capital") to be the primary market.
Fixed income investments are valued at the mean of representative quoted bid and
ask prices for such investments or, if such prices are not available, at prices
for investments of comparative maturity, quality and type; however, when G.T.
Capital deems it appropriate, prices obtained for the day of valuation from a
bond pricing service will be used. Short-term investments with maturity of 60
days or less are valued at amortized cost adjusted for foreign exchange
translation and market fluctuation, if any.
Investments for which market quotations are not readily available (including
restricted securities which are subject to limitations on their sale) are valued
at fair value as determined in good faith by or under the direction of the
Company's Board of Directors.
Portfolio securities which are primarily traded on foreign exchanges are
generally valued at the preceding closing values of such securities on their
respective exchanges, and those values are then translated into U.S. dollars at
the current exchange rate, except that when an occurrence subsequent to the time
a value was so established is likely to have materially changed such value, then
the fair value of those securities will be determined by consideration of other
factors by or under the direction of the Company's Board of Directors.
(B) FOREIGN CURRENCY TRANSLATION
The accounting records are maintained in U.S. dollars. The market values of
foreign securities, currency holdings, other assets and liabilities are recorded
in the books and records of the Fund after translation to U.S. dollars based on
the exchange rates on that day. The cost of each security is determined using
historical exchange rates. Income and withholding taxes are translated at
prevailing exchange rates when accrued or incurred.
The Fund does not isolate that portion of the results of operations resulting
from changes in foreign exchange rates on investments from the fluctuations
arising from changes in market prices of securities held. Such fluctuations are
included with the net realized and unrealized gain or loss from investments.
Reported net realized foreign exchange gains or losses arise from sales and
maturities of short-term securities forward foreign currency contracts, sales of
forward currency conversions, currency gains or losses realized between the
trade and settlement dates on securities transactions, the difference between
the amounts of dividends, interest, and foreign withholding taxes recorded on
the Fund's books, and the U.S. dollar equivalent of the amounts actually
received or paid. Net unrealized foreign exchange gains and losses arise from
changes in the value of assets and liabilities other than investments in
securities at fiscal year end, resulting from changes in the exchange rate.
(C) REPURCHASE AGREEMENTS
With respect to repurchase agreements entered into by the Fund, it is the Fund's
policy to always receive, as collateral, United States government securities or
other high quality debt securities of which the value, including accrued
interest, is at least equal to the
Statement of Additional Information Page 61
<PAGE>
G.T. LATIN AMERICA GROWTH FUND
amount to be paid to the Fund under each agreement at its maturity.
(D) FORWARD FOREIGN CURRENCY CONTRACTS
A forward foreign currency contract ("Forward") is an agreement between two
parties to buy and sell a currency at a set price on a future date. The market
value of the Forward fluctuates with changes in currency exchange rates. The
Forward is marked-to-market daily and the change in market value is recorded by
the Fund as an unrealized gain or loss. When the Forward is closed, the Fund
records a realized gain or loss equal to the difference between the value at the
time it was opened and the value at the time it was closed. The Fund could be
exposed to risk if a counterparty is unable to meet the terms of the contract or
if the value of the currency changes unfavorably. The Fund may enter into
Forwards in connection with planned purchases or sales of securities or to hedge
the value of portfolio securities denominated in a foreign currency.
(E) OPTION ACCOUNTING PRINCIPLES
When the Fund writes a call or put option, an amount equal to the premium
received is included in the Fund's "Statement of Assets and Liabilities" as an
asset and an equivalent liability. The amount of the liability is subsequently
marked-to-market to reflect the current market value of the option. The current
market value of an option listed on a traded exchange is valued at its last
settlement price, or in the case of an over-the-counter option is valued at the
bid price obtained from a broker. If an option expires on its stipulated
expiration date or if the Fund enters into a closing purchase transaction, a
gain or loss is realized without regard to any unrealized gain or loss on the
underlying security, and the liability related to such option is extinguished.
If a written call option is exercised, a gain or loss is realized from the sale
of the underlying security and the proceeds of the sale are increased by the
premium originally received. If a written put option is exercised, the cost of
the underlying security purchased would be decreased by the premium originally
received. The Fund can write options only on a covered basis, which for a call
requires that the fund hold the underlying security, and for a put requires the
Fund to maintain in a segregated account cash, U.S. government securities or
other liquid, high-grade debt securities in an amount not less than the exercise
price at all times while the put option is outstanding. At October 31, 1994, the
Fund had written options outstanding.
The premium paid by the Fund for the purchase of a call or put option is
included in the Fund's "Statement of Assets and Liabilities" as an investment
and subsequently "marked-to-market" to reflect the current market value of the
option. If an option which the Fund has purchased expires on the stipulated
expiration date, the Fund realizes a loss in the amount of the cost of the
option. If the Fund enters into a closing sale transaction, the Fund realizes a
gain or loss, depending on whether proceeds from the closing sale transaction
are greater or less than the cost of the option. If the Fund exercises a call
option, the cost of the securities acquired by exercising the call is increased
by the premium paid to buy the call. If the Fund exercises a put option, it
realizes a gain or loss from the sale of the underlying security, and the
proceeds from such sale are decreased by the premium originally paid. At October
31, 1994, the Fund held no purchased option contracts.
The risk associated with purchasing options is limited to the premium originally
paid. The risk in writing a call option is that the Fund may forego the
opportunity of profit if the market value of the underlying security or index
increases and the option is exercised. The risk in writing a put option is that
the Fund may incur a loss if the market value of the underlying security or
index decreases and the option is exercised. In addition, there is the risk the
Fund may not be able to enter into a closing transaction because of an illiquid
secondary market.
(F) FUTURES CONTRACTS
A futures contract is an agreement between two parties to buy and sell a
security at a set price on a future date. Upon entering into such a contract the
Fund is required to pledge to the broker an amount of cash or securities equal
to the minimum "initial margin" requirements of the exchange on which the
contract is traded. Pursuant to the contract, the Fund agrees to receive from or
pay to the broker an amount of cash equal to the daily fluctuation in value of
the contract. Such receipts or payments are known as "variation margin" and are
recorded by the Fund as unrealized gains or losses. When the contract is closed,
the Fund records a realized gain or loss equal to the difference between the
value of the contract at the time it was opened and the value at the time it was
closed. The potential risk to the Fund is that the change in value of the
underlying securities may not correlate to the change in value of the contracts.
(G) SECURITY TRANSACTIONS AND RELATED INVESTMENT INCOME
Security transactions are accounted for on the trade date (date the order to buy
or sell is executed). The cost of securities sold is determined on an identified
cost basis. Interest income is recorded on the accrual basis. Where a high level
of uncertainty exists as to its collection, income is recorded net of all
withholding tax with any rebate recorded when received. The Fund
Statement of Additional Information Page 62
<PAGE>
G.T. LATIN AMERICA GROWTH FUND
may trade securities on other than normal settlement terms. This may increase
the risk if the other party to the transaction fails to deliver and causes the
Fund to subsequently invest at less advantageous prices.
(H) TAXES
It is the policy of the Fund to meet the requirements for qualification as a
"regulated investment company" under the Internal Revenue Code of 1986, as
amended ("Code"). It is also the intention of the Fund to make distributions
sufficient to avoid imposition of any excise tax under Section 4982 of the Code.
Therefore, no provision has been made for Federal taxes on income, capital
gains, or unrealized appreciation of securities held, and excise tax on income
and capital gains.
(I) DISTRIBUTIONS TO SHAREHOLDERS
Distributions to shareholders are recorded by the Fund on the ex-date. Income
and capital gain distributions are determined in accordance with Federal income
tax regulations which may differ from generally accepted accounting principles.
These differences are primarily due to differing treatments of income and gains
on various investment securities held by the Fund and timing differences.
(J) DEFERRED ORGANIZATIONAL EXPENSES
Expenses incurred by the Fund in connection with its organization, its
registration with the Securities and Exchange Commission and with various states
and the initial public offering of its shares aggregated $177,793. These
expenses are being amortized on a straight line basis over a five-year period.
(K) ADOPTION OF AICPA STATEMENT OF POSITION 93-2
As of November 1, 1993, the Fund adopted Statement of Position 93-2
"Determination, Disclosure, and Financial Statement Presentation of Income,
Capital Gain, and Return of Capital Distributions by Investment Companies."
Accordingly, permanent book and tax basis differences relating to shareholder
distributions have been reclassified to paid-in capital. As of November 1, 1993,
the cumulative effect of such differences totaling $78,578 and $119,016 was
reclassified from undistributed net investment income and accumulated net
realized gain on investments and foreign currency conversions, respectively, to
paid-in capital. Net investment loss, net realized gain on investments and
foreign currency conversions and net assets were not affected by this change.
The Statement of Changes in Net Assets and the Financial Highlights, for the
prior periods, have not been restated to reflect the changes in this
presentation.
(L) FOREIGN SECURITIES
There are certain additional considerations and risks associated with investing
in foreign securities and currency transactions that are not inherent with
investments of domestic origin. The Fund's investment in emerging market
countries may involve greater risks than investments in more developed markets
and the price of such investments may be volatile. These risks of investing in
foreign and emerging markets may include foreign currency exchange rate
fluctuations, perceived credit risk, adverse political and economic developments
and possible adverse foreign government intervention.
(M) INDEXED SECURITIES
The Fund may invest in indexed securities whose value is linked either directly
or indirectly to changes in foreign currencies, interest rates, equities,
indices, or other reference instruments. Indexed securities may be more volatile
than the reference instrument itself, but any loss is limited to the amount of
the original investment.
2. RELATED PARTIES
G.T. Capital is the Fund's investment manager and administrator. The Fund pays
investment management and administration fees to G.T. Capital at the annualized
rate of 0.975% of the first $500 million of average daily net assets of the
Fund; 0.95% of the next $500 million; 0.925% of the next $500 million and 0.90%
on amounts thereafter. These fees are computed daily and paid monthly, and are
subject to reduction in any year to the extent that the Fund's expenses
(exclusive of brokerage commissions, taxes, interest, distribution-related
expenses and extraordinary expenses) exceed the most stringent limits prescribed
by the laws or regulations of any state in which the Fund's shares are offered
for sale, based on the average total net asset value of the Fund.
G.T. Global Financial Services, Inc. ("G.T. Global"), an affiliate of G.T.
Capital, is the Fund's distributor. The Fund offers Class A shares and Class B
shares for purchase.
Class A shares are subject to initial sales charges imposed at the time of
purchase, in accordance with the schedule included in the Fund's current
prospectus. G.T. Global collects the sales charges imposed on sales of Class A
shares, and reallows a portion of such charges to dealers through which the
sales are made. For the year ended October 31, 1994, G.T. Global retained
$443,629 of such sales charges. G.T. Global also makes ongoing shareholder
servicing and trail commission payments to dealers whose clients hold Class A
shares.
Class B shares are not subject to initial sales charges. When Class B shares are
sold, G.T. Global from its own resources pays commissions to dealers through
Statement of Additional Information Page 63
<PAGE>
G.T. LATIN AMERICA GROWTH FUND
which the sales are made. Certain redemptions of Class B shares made within six
years of purchase are subject to contingent deferred sales charges ("CDSCs"), in
accordance with the Fund's current prospectus. For the year ended October 31,
1994, G.T. Global collected CDSCs in the amount of $362,115. In addition, G.T.
Global makes ongoing shareholder servicing and trail commission payments to
dealers whose clients hold Class B shares.
Pursuant to Rule 12b-1 under the 1940 Act, the Company's Board of Directors has
adopted separate distribution plans with respect to the Fund's Class A shares
("Class A Plan") and Class B shares ("Class B Plan"), pursuant to which the Fund
reimburses G.T. Global for a portion of its shareholder servicing and
distribution expenses. Under the Class A Plan, the Fund may pay G.T. Global a
service fee at the annualized rate of up to 0.25% of the average daily net
assets of the Fund's Class A shares for G.T. Global's expenditures incurred in
servicing and maintaining shareholder accounts, and may pay G.T. Global a
distribution fee at the annualized rate of up to 0.50% of the average daily net
assets of the Fund's Class A shares, less any amounts paid by the Fund as the
aforementioned service fee, for G.T. Global's expenditures incurred in providing
services as distributor. All expenses for which G.T. Global is reimbursed under
the Class A Plan will have been incurred within one year of such reimbursement.
Pursuant to the Fund's Class B Plan, the Fund may pay G.T. Global a service fee
at the annualized rate of up to 0.25% of the average daily net assets of the
Fund's Class B shares for G.T. Global's expenditures incurred in servicing and
maintaining shareholder accounts, and may pay G.T. Global a distribution fee at
the annualized rate of up to 0.75% of the average daily net assets of the Fund's
Class B Shares for G.T. Global's expenditures incurred in providing services as
distributor. Expenses incurred under the Class B Plan in excess of 1.00%
annually may be carried forward for reimbursement in subsequent years as long as
that Plan continues in effect.
G.T. Capital and G.T. Global voluntarily have undertaken to limit the Fund's
expenses (exclusive of brokerage commissions, taxes, interest, and extraordinary
expenses) to the maximum annual rate of 2.40% and 2.90%, of the average net
assets of the Fund's Class A and Class B shares, respectively. If necessary,
this limitation will be effected by waivers by G.T. Capital of investment
management and administration fees, waivers by G.T. Global of payments under the
Class A Plan and/or Class B Plan and/or reimbursements by G.T. Capital or G.T.
Global of portions of the Fund's other operating expenses.
G.T. Global Investor Services, Inc. ("G.T. Services"), an affiliate of G.T.
Capital and G.T. Global, is the transfer agent of the Fund.
The Company pays each of its Directors who is not an employee, officer or
director of G.T. Capital, G.T. Global or G.T. Services $5,000 per year plus $300
for each meeting of the board or any committee thereof attended by the Director.
3. PURCHASES AND SALES OF SECURITIES
For the year ended October 31, 1994, purchases and sales of investment
securities by the Fund, other than U.S. government obligations and short-term
investments, aggregated $825,391,305 and $533,274,904. There were no purchases
or sales of U.S. government obligations for the year ended October 31, 1994.
Statement of Additional Information Page 64
<PAGE>
G.T. LATIN AMERICA GROWTH FUND
4. CAPITAL SHARES
At October 31, 1994, there were 6,000,000,000 shares of the Company's common
stock authorized, at $0.0001 par value. Of this amount, 200,000,000 were
classified as shares of the Fund; 400,000,000 were classified as shares of G.T.
Global Government Income Fund; 200,000,000 were classified as shares of G.T.
Global Health Care Fund; 200,000,000 were classified as shares of G.T. Global
Strategic Income Fund; 200,000,000 were classified as shares of G.T. Global
Currency Fund (inactive); 200,000,000 were classified as shares of G.T. Global
Growth & Income Fund; 200,000,000 were classified as shares of G.T. Global Small
Companies Fund (inactive); 200,000,000 were classified as shares of G.T. Global
Natural Resources Fund; 200,000,000 were classified as shares of G.T. Global
Infrastructure Fund; 400,000,000 were classified as shares of G.T. Global
Telecommunications Fund; 200,000,000 were classified as shares of G.T. Global
Emerging Markets Fund; and 200,000,000 were classified as shares of G.T. Global
Financial Services Fund; 200,000,000 were classified as shares of G.T. Global
High Income Fund; 200,000,000 were classified as shares of G.T. Global Consumer
Products and Services Fund (inactive); and 2,800,000,000 shares remain
unclassified. The shares of each of the foregoing series of the Company were
divided equally into two classes, designated Class A and Class B common stock.
Transactions in capital shares of the Fund were as follows:
CAPITAL SHARE TRANSACTIONS
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
OCTOBER 31, 1994 OCTOBER 31, 1993
--------------------------- ------------------------
CLASS A SHARES AMOUNT SHARES AMOUNT
------------ ------------- ---------- ------------
<S> <C> <C> <C> <C>
Shares sold..................................................... 33,720,715 $ 806,747,697 2,506,794 $ 46,069,459
Shares issued in connection with reinvestment of
distributions................................................. 111,943 2,416,821 368,884 5,503,764
------------ ------------- ---------- ------------
33,832,658 809,164,518 2,875,678 51,573,223
Shares repurchased.............................................. (27,463,633) (659,239,270) (2,372,133) (40,939,595)
------------ ------------- ---------- ------------
Net increase.................................................... 6,369,025 $ 149,925,248 503,545 $ 10,633,628
------------ ------------- ---------- ------------
------------ ------------- ---------- ------------
<CAPTION>
APRIL 1, 1993
YEAR ENDED TO
OCTOBER 31, 1994 OCTOBER 31, 1993
--------------------------- ------------------------
CLASS B SHARES AMOUNT SHARES AMOUNT
------------ ------------- ---------- ------------
<S> <C> <C> <C> <C>
Shares sold..................................................... 14,675,635 $ 350,025,309 801,047 $ 15,008,120
Shares issued in connection with reinvestment of Class "B"
distributions................................................. 18,533 399,660 0 0
------------ ------------- ---------- ------------
14,694,168 350,424,969 801,047 15,008,120
Shares repurchased.............................................. (7,221,595) (169,571,029) (113,511) (2,214,627)
------------ ------------- ---------- ------------
Net increase.................................................... 7,472,573 $ 180,853,940 687,536 $ 12,793,493
------------ ------------- ---------- ------------
------------ ------------- ---------- ------------
</TABLE>
5. WRITTEN OPTIONS:
The Fund's written options contract activity for the year ended October 31,
1994, was as follows:
COVERED CALL OPTIONS WRITTEN
<TABLE>
<CAPTION>
NUMBER OF
CONTRACTS PREMIUM
--------- -------
<S> <C> <C>
Options outstanding at October 31, 1993.......................... 0 $ 0
Options written during the year ended October 31, 1994........... 300 66,750
Options cancelled in closing purchase transactions............... 0 0
Options expired prior to exercise................................ 0 0
Options exercised................................................ 0 0
--- -------
Options outstanding at October 31, 1994.......................... 300 $66,750
--- -------
--- -------
</TABLE>
- --------------
FEDERAL TAX INFORMATION:
For Federal income tax purposes, the Fund had distributions from long-term
capital gains of $1,023,959.
Statement of Additional Information Page 65
<PAGE>
G.T. LATIN AMERICA GROWTH FUND
[LOGO]
G.T. GLOBAL GROUP OF FUNDS
G.T. GLOBAL OFFERS A BROAD RANGE OF MUTUAL FUNDS TO COMPLEMENT MANY
INVESTORS' PORTFOLIOS. FOR MORE INFORMATION AND A PROSPECTUS ON ANY OF THE
G.T. GLOBAL FUNDS, PLEASE CONTACT YOUR INVESTMENT COUNSELOR OR CALL G.T.
GLOBAL DIRECTLY AT 1-800-824-1580.
GROWTH FUNDS
/ / GLOBALLY DIVERSIFIED FUNDS
G.T. GLOBAL WORLDWIDE GROWTH FUND
Invests around the world, including the U.S.
G.T. GLOBAL INTERNATIONAL GROWTH FUND
Provides portfolio diversity for U.S. investors by investing outside the U.S.
G.T. GLOBAL EMERGING MARKETS FUND
Gives access to the growth potential of developing economies
/ / GLOBAL THEME FUNDS
G.T. GLOBAL HEALTH CARE FUND
Invests in the growing health care industries worldwide
G.T. GLOBAL TELECOMMUNICATIONS FUND
Invests in companies worldwide that develop, manufacture or sell
telecommunications services or equipment
G.T. GLOBAL INFRASTRUCTURE FUND
Seeks companies that build, improve or maintain a country's infrastructure
G.T. GLOBAL FINANCIAL SERVICES FUND
Focuses on the worldwide opportunities from the demand for financial services
and products
G.T. GLOBAL NATURAL RESOURCES FUND
Concentrates on companies that own, explore or develop natural resources
G.T. GLOBAL CONSUMER PRODUCTS AND
SERVICES FUND
Invests in companies that manufacture, market, retail, or distribute consumer
products or services
/ / REGIONALLY DIVERSIFIED FUNDS
G.T. GLOBAL PACIFIC GROWTH FUND
Offers access to the emerging and established markets of the Pacific Rim,
excluding Japan
G.T. GLOBAL EUROPE GROWTH FUND
Focuses on investment opportunities in the new, unified Europe
G.T. LATIN AMERICA GROWTH FUND
Invests in the emerging markets of Latin America
/ / SINGLE COUNTRY FUNDS
G.T. GLOBAL AMERICA GROWTH FUND
Concentrates on small and medium-sized companies in the U.S.
G.T. GLOBAL JAPAN GROWTH FUND
Provides U.S. investors with direct access to the Japanese market
GROWTH AND INCOME FUND
G.T. GLOBAL GROWTH & INCOME FUND
Invests in blue-chip stocks and government bonds from around the world
INCOME FUNDS
G.T. GLOBAL GOVERNMENT INCOME FUND
Earns high monthly income from global government securities
G.T. GLOBAL STRATEGIC INCOME FUND
Allocates its assets among debt securities from the U.S., developed foreign
countries and emerging markets
G.T. GLOBAL HIGH INCOME FUND
Invests in a portfolio of emerging market debt securities
MONEY MARKET FUND
G.T. GLOBAL DOLLAR FUND
Invests in high quality, U.S. dollar-denominated money market securities
worldwide for stability and preservation of capital
NO DEALER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS STATEMENT OF
ADDITIONAL INFORMATION AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY G.T.
LATIN AMERICA GROWTH FUND, G.T. INVESTMENT FUNDS, INC. G.T. CAPITAL
MANAGEMENT, INC. OR G.T. GLOBAL FINANCIAL SERVICES, INC. THIS STATEMENT OF
ADDITIONAL INFORMATION DOES NOT CONSTITUTE AN OFFER TO SELL OR SOLICITATION
OF ANY OFFER TO BUY ANY OF THE SECURITIES OFFERED HEREBY IN ANY JURISDICTION
TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER IN SUCH
JURISDICTION.
LATSX506MC
<PAGE>
[LOGO]
G.T. GLOBAL EMERGING
MARKETS FUND: ADVISOR CLASS
50 California Street, 27th Floor
San Francisco, California 94111
(415) 392-6181
Toll Free: (800) 824-1580
Statement of Additional Information
March 1, 1995
- --------------------------------------------------------------------------------
G.T. Global Emerging Markets Fund ("Fund") is a diversified mutual fund
organized as a separate series of G.T. Investment Funds, Inc. ("Company"), a
registered open-end management investment company. This Statement of Additional
Information relating to the Advisor Class share of the Fund, which is not a
prospectus, supplements and should be read in conjunction with the Fund's
current Advisor Class Prospectus dated March 1, 1995. A copy of the Fund's
Prospectus is available without charge by writing to the above address or by
calling the Fund at the toll free telephone number listed above.
G.T. Capital Management, Inc. ("G.T. Capital") serves as the Fund's investment
manager and administrator. The distributor of the Fund's shares is G.T. Global
Financial Services, Inc. ("G.T. Global"). The Fund's transfer agent is G.T.
Global Investor Services, Inc. ("G.T. Services" or "Transfer Agent").
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Page No.
--------
<S> <C>
Investment Objective and Policies........................................................................................ 2
Options, Futures and Currency Strategies................................................................................. 5
Risk Factors............................................................................................................. 14
Investment Limitations................................................................................................... 16
Execution of Portfolio Transactions...................................................................................... 18
Directors and Executive Officers......................................................................................... 20
Management............................................................................................................... 22
Valuation of Fund Shares................................................................................................. 23
Information Relating to Sales and Redemptions............................................................................ 24
Taxes.................................................................................................................... 25
Additional Information................................................................................................... 28
Investment Results....................................................................................................... 29
Description of Debt Ratings.............................................................................................. 46
Financial Statements..................................................................................................... 48
</TABLE>
Statement of Additional Information Page 1
<PAGE>
G.T. GLOBAL EMERGING MARKETS FUND
INVESTMENT OBJECTIVE
AND POLICIES
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVE
The investment objective of the Fund is long-term growth of capital. The Fund
seeks this objective by investing, under normal circumstances, at least 65% of
its total assets in equity securities of companies in emerging markets. The Fund
does not consider the following countries to be emerging markets: Australia,
Austria, Belgium, Canada, Denmark, England, Finland, France, Germany, Ireland,
Italy, Japan, the Netherlands, New Zealand, Norway, Spain, Sweden, Switzerland
and United States. The Fund normally may invest up to 35% of its assets in a
combination of (i) debt securities of government or corporate issuers in
emerging markets; (ii) equity and debt securities of issuers in developed
countries, including the United States; (iii) securities of issuers in emerging
markets not included in the list of emerging markets set forth in the Fund's
current Prospectus, if investing therein becomes feasible and desirable
subsequent to the date of the Fund's current Prospectus; and (iv) cash and money
market instruments.
In determining what countries constitute emerging markets, G.T. Capital will
consider, among other things, data, analysis, and classification of countries
published or disseminated by the International Bank for Reconstruction and
Development (commonly known as the World Bank) and the International Finance
Corporation.
SELECTION OF EQUITY INVESTMENTS
G.T. Capital is the investment manager of the Fund. In determining the
appropriate distribution of investments among various countries and geographic
regions for the Fund, G.T. Capital ordinarily considers the following factors:
prospects for relative economic growth between the different countries in which
the Fund may invest; expected levels of inflation; government policies
influencing business conditions; the outlook for currency relationships; and the
range of the individual investment opportunities available to international
investors.
In analyzing companies in emerging markets for investment by the Fund, G.T.
Capital ordinarily looks for one or more of the following characteristics: an
above-average earnings growth per share; high return on invested capital;
healthy balance sheet; sound financial and accounting policies and overall
financial strength; strong competitive advantages; effective research and
product development and marketing; efficient service; pricing flexibility;
strength of management; and general operating characteristics which will enable
the companies to compete successfully in their respective marketplaces. In
certain countries, governmental restrictions and other limitations on investment
may affect the maximum percentage of equity ownership in any one company by the
Fund. In addition, in some instances only special classes of securities may be
purchased by foreigners and the market prices, liquidity and rights with respect
to those securities may vary from shares owned by nationals.
Although the Fund values its assets daily in terms of U.S. dollars, the Fund
does not intend to convert its holdings of foreign currencies into U.S. dollars
on a daily basis. The Fund will do so from time to time, and investors should be
aware of the costs of currency conversion. Although foreign exchange dealers do
not charge a fee for conversion, they do realize a profit based on the
difference ("spread") between the prices at which they are buying and selling
various currencies. Thus, a dealer may offer to sell a foreign currency to the
Fund at one rate, while offering a lesser rate of exchange should the Fund
desire to sell that currency to the dealer.
The Fund may be prohibited under the Investment Company Act of 1940, as amended
("1940 Act") from purchasing the securities of any foreign company that, in its
most recent fiscal year, derived more than 15% of its gross revenues from
securities-related activities ("securities-related companies"). In a number of
countries, commercial banks act as securities broker/dealers, investment
advisers and underwriters or otherwise engage in securities-related activities,
which may limit the Fund's ability to hold securities issued by banks. The
Securities and Exchange Commission ("SEC") has proposed a rule which, if
adopted, may permit the Fund to invest in certain of these securities subject to
certain restrictions. The Fund has obtained an exemption from the SEC to permit
the Fund to invest in a manner that is consistent with the SEC's proposed rule.
INVESTMENTS IN OTHER INVESTMENT COMPANIES
With respect to certain countries investments by the Fund presently may be made
only by acquiring shares of other investment companies with local governmental
approval to invest in those countries. The Fund may invest in the securities
Statement of Additional Information Page 2
<PAGE>
G.T. GLOBAL EMERGING MARKETS FUND
of closed-end investment companies within the limits of the 1940 Act. These
limitations currently provide that, in general, the Fund may purchase shares of
a closed-end investment company unless (a) such a purchase would cause the Fund
to own in the aggregate more than 3 percent of the total outstanding voting
stock of the investment company or (b) such a purchase would cause the Fund to
have more than 5 percent of its total assets invested in the investment company
or more than 10 percent of its total assets invested in the aggregate in all
such investment companies. Investment in such investment companies may also
involve the payment of substantial premiums above the value of such companies'
portfolio securities. The Fund does not intend to invest in such funds unless,
in the judgment of G.T. Capital, the potential benefits of such investments
justify the payment of any applicable premiums. The yield of such securities
will be reduced by operating expenses of such companies including payments to
the investment managers of those investment companies. At such time as direct
investment in these countries is allowed, the Fund anticipates investing
directly in these markets.
SAMURAI AND YANKEE BONDS
Subject to its fundamental investment restrictions, the Fund may invest in
yen-denominated bonds sold in Japan by non-Japanese issuers ("Samurai bonds"),
and may invest in dollar-denominated bonds sold in the United States by non-U.S.
issuers ("Yankee bonds"). As compared with bonds issued in their countries of
domicile, such bond issues normally carry a higher interest rate but are less
actively traded. It is the policy of the Fund to invest in Samurai or Yankee
bond issues only after taking into account considerations of quality and
liquidity, as well as yield. These bonds would be issued by governments which
are members of the Organization for Economic Cooperation and Development
("O.E.C.D.") or have AAA ratings.
DEPOSITORY RECEIPTS
The Fund may hold securities of foreign issuers in the form of American
Depository Receipts ("ADRs"), American Depository Shares ("ADSs") and European
Depository Receipts ("EDRs"), or other securities convertible into securities of
eligible foreign issuers. These securities may not necessarily be denominated in
the same currency as the securities for which they may be exchanged. ADRs and
ADSs typically are issued by an American bank or trust company which evidences
ownership of underlying securities issued by a foreign corporation. EDRs, which
are sometimes referred to as Continental Depository Receipts ("CDRs"), are
receipts issued in Europe typically by foreign banks and trust companies that
evidence ownership of either foreign or domestic securities. Generally, ADRs and
ADSs in registered form are designed for use in United States securities markets
and EDRs and CDRs in bearer form are designed for use in European securities
markets. For purposes of the Fund's investment policies, the Fund's investments
in ADRs, ADSs, EDRs, and CDRs will be deemed to be investments in the equity
securities representing securities of foreign issuers into which they may be
converted.
ADR facilities may be established as either "unsponsored" or "sponsored." While
ADRs issued under these two types of facilities are in some respects similar,
there are distinctions between them relating to the rights and obligations of
ADR holders and the practices of market participants. A depository may establish
an unsponsored facility without participation by (or even necessarily the
acquiescence of) the issuer of the deposited securities, although typically the
depository requests a letter of non-objection from such issuer prior to the
establishment of the facility. Holders of unsponsored ADRs generally bear all
the costs of such facilities. The depository usually charges fees upon the
deposit and withdrawal of the deposited securities, the conversion of dividends
into U.S. dollars, the disposition of non-cash distributions, and the
performance of other services. The depository of an unsponsored facility
frequently is under no obligation to distribute shareholder communications
received from the issuer of the deposited securities or to pass through voting
rights to ADR holders in respect of the deposited securities. Sponsored ADR
facilities are created in generally the same manner as unsponsored facilities,
except that the issuer of the deposited securities enters into a deposit
agreement with the depository. The deposit agreement sets out the rights and
responsibilities of the issuer, the depository and the ADR holders. With
sponsored facilities, the issuer of the deposited securities generally will bear
some of the costs relating to the facility (such as dividend payment fees of the
depository), although ADR holders continue to bear certain other costs (such as
deposit and withdrawal fees). Under the terms of most sponsored arrangements,
depositories agree to distribute notices of shareholder meetings and voting
instructions, and to provide shareholder communications and other information to
the ADR holders at the request of the issuer of the deposited securities. The
Fund may invest in both sponsored and unsponsored ADRs.
WARRANTS OR RIGHTS
Warrants or rights may be acquired by the Fund in connection with other
securities or separately and provide the Fund with the right to purchase at a
later date other securities of the issuer. As a condition of its continuing
registration in a state, the Fund has undertaken that its investments in
warrants or rights, valued at the lower of cost or market, will not exceed 5% of
the value of its net assets and not more than 2% of such assets will be invested
in warrants and rights which are not listed on the American or New York Stock
Exchange. Warrants or rights acquired by the Fund in units or attached to
Statement of Additional Information Page 3
<PAGE>
G.T. GLOBAL EMERGING MARKETS FUND
securities will be deemed to be without value for purpose of this restriction.
These limits are not fundamental policies of the Fund and may be changed by vote
of the Company's Board of Directors without shareholder approval.
COMMERCIAL BANK OBLIGATIONS
For the purposes of the Fund's investment policies with respect to bank
obligations, obligations of foreign branches of U.S. banks and of foreign banks
are obligations of the issuing bank and may be general obligations of the parent
bank. Such obligations, however, may be limited by the terms of a specific
obligation and by government regulation. As with investment in non-U.S.
securities in general, investments in the obligations of foreign branches of
U.S. banks and of foreign banks may subject the Fund to investment risks that
are different in some respects from those of investments in obligations of
domestic issuers. Although the Fund typically will acquire obligations issued
and supported by the credit of U.S. or foreign banks having total assets at the
time of purchase in excess of $1 billion, this $1 billion figure is not an
investment policy or restriction of the Fund. For the purposes of calculation
with respect to the $1 billion figure, the assets of a bank will be deemed to
include the assets of its U.S. and non-U.S. branches.
REPURCHASE AGREEMENTS
The Fund will invest only in repurchase agreements collateralized at all times
in an amount at least equal to the repurchase price plus accrued interest. To
the extent that the proceeds from any sale of such collateral upon a default in
the obligation to repurchase were less than the repurchase price, the Fund would
suffer a loss. If the financial institution which is party to the repurchase
agreement petitions for bankruptcy or otherwise becomes subject to bankruptcy or
other liquidation proceedings, there may be restrictions on the Fund's ability
to sell the collateral and the Fund could suffer a loss. However, with respect
to financial institutions whose bankruptcy or liquidation proceedings are
subject to the U.S. Bankruptcy Code, the Fund intends to comply with provisions
under the U.S. Bankruptcy Code that would allow it immediately to resell the
collateral. There is no limitation on the amount of the Fund's assets that may
be subject to repurchase agreements at any given time. The Fund will not enter
into a repurchase agreement with a maturity of more than seven days if, as a
result, more than 15% of the value of its net assets would be invested in such
repurchase agreements and other illiquid investments.
BORROWING, REVERSE REPURCHASE AGREEMENTS AND "ROLL" TRANSACTIONS
The Fund's borrowings will not exceed 33 1/3% of the Fund's total assets, i.e.,
the Fund's total assets at all times will equal at least 300% of the amount of
outstanding borrowings. If market fluctuations in the value of the Fund's
portfolio holdings or other factors cause the ratio of the Fund's total assets
to outstanding borrowings to fall below 300%, the Fund may be required to sell
portfolio securities to restore 300% asset coverage, even though from an
investment standpoint such sales might be disadvantageous. The Fund also may
borrow up to 5% of its total assets for temporary or emergency purposes other
than to meet redemptions. Any borrowing by the Fund may cause greater
fluctuation in the value of its shares than would be the case if the Fund did
not borrow.
The Fund's fundamental investment limitations permit the Fund to borrow money
for leveraging purposes. The Fund, however, currently is prohibited, pursuant to
a non-fundamental investment policy, from purchasing securities during times
when outstanding borrowings represent more than 5% of its assets. Nevertheless,
this policy may be changed in the future by vote of a majority of the Company's
Board of Directors. In the event that the Fund employs leverage in the future,
it would be subject to certain additional risks. Use of leverage creates an
opportunity for greater growth of capital but would exaggerate any increases or
decreases in the Fund's net asset value. When the income and gains on securities
purchased with the proceeds of borrowings exceed the costs of such borrowings,
the Fund's earnings or net asset value will increase faster than otherwise would
be the case; conversely, if such income and gains fail to exceed such costs, the
Fund's earnings or net asset value would decline faster than would otherwise be
the case.
The Fund may enter into reverse repurchase agreements. A reverse repurchase
agreement is a borrowing transaction in which the Fund transfers possession of a
security to another party, such as a bank or broker/dealer in return for cash,
and agrees to repurchase, the security in the future at an agreed upon price,
which includes an interest component. The Fund also may engage in "roll"
borrowing transactions which involve the Fund's sale of Government National
Mortgage Association ("GNMA") certificates or other securities together with a
commitment (for which the Fund may receive a fee) to purchase similar, but not
identical, securities at a future date. The Fund will maintain in a segregated
account with a custodian cash, U.S. government securities or other liquid, high
grade debt securities in an amount sufficient to cover its obligations under
"roll" transactions and reverse repurchase agreements with broker/dealers. No
segregation is required for reverse repurchase agreements with banks.
LENDING OF PORTFOLIO SECURITIES
For the purpose of realizing additional income, the Fund may make secured loans
of portfolio securities amounting to not more than 30% of its total assets.
Securities loans are made to broker/dealers or institutional investors pursuant
to
Statement of Additional Information Page 4
<PAGE>
G.T. GLOBAL EMERGING MARKETS FUND
agreements requiring that the loans continuously be secured by collateral at
least equal at all times to the value of the securities lent plus any accrued
interest, "marked to market" on a daily basis. The collateral received will
consist of cash, U.S. short-term government securities, bank letters of credit
or such other collateral as may be permitted under the Fund's investment program
and by regulatory agencies and approved by the Company's Board of Directors.
While the securities loan is outstanding, the Fund will continue to receive the
equivalent of the interest or dividends paid by the issuer on the securities, as
well as interest on the investment of the collateral or a fee from the borrower.
The Fund has a right to call each loan and obtain the securities on five
business days' notice. The Fund will not have the right to vote equity
securities while they are being lent, but it will call in a loan in anticipation
of any important vote. The risks in lending portfolio securities, as with other
extensions of secured credit, consist of possible delay in receiving additional
collateral or in recovery of the securities or possible loss of rights in the
collateral should the borrower fail financially. Loans only will be made to
firms deemed by G.T. Capital to be of good standing and will not be made unless,
in the judgment of G.T. Capital, the consideration to be earned from such loans
would justify the risk.
SHORT SALES
The Fund is authorized to make short sales of securities, although it has no
current intention of doing so. A short sale is a transaction in which the Fund
sells a security in anticipation that the market price of that security will
decline. The Fund may make short sales (i) to offset potential declines in long
positions in securities it owns, or anticipates acquiring, and (ii) in order to
maintain portfolio flexibility.
When the Fund makes a short sale of a security it does not own, it must borrow
the security sold short and deliver it to the broker/dealer or other
intermediary through which it made the short sale. The Fund may have to pay a
fee to borrow particular securities and will often be obligated to pay over any
payments received on such borrowed securities.
The Fund's obligation to replace the borrowed security when the borrowing is
called or expires will be secured by collateral (usually cash, government
securities or other highly liquid securities similar to those borrowed)
deposited with the intermediary. The Fund also will be required to deposit
similar collateral with its custodian to the extent, if any, necessary so that
the value of both collateral deposits in the aggregate is at all times equal to
at least 100% of the current market value of the security sold short. Depending
on arrangements made with the intermediary from which it borrowed the security
regarding payment of any amounts received by the Fund on such security, the Fund
may not receive any payments (including interest) on its collateral deposited
with such intermediary.
If the price of the security sold short increases between the time of the short
sale and the time the Fund replaces the borrowed security, the Fund will incur a
loss; conversely, if the price declines, the Fund will realize a gain. Any gain
will be decreased, and any loss increased, by the transaction costs associated
with the transaction. Although the Fund's gain is limited by the price at which
it sold the security short, its potential loss theoretically is unlimited.
The Fund will not make a short sale if, after giving effect to such sale, the
market value of the securities sold short exceeds 25% of the value of its total
assets or the Fund's aggregate short sales of the securities of any one issuer
exceed the lesser of 2% of the Fund's net assets or 2% of the securities of any
class of the issuer. Moreover, the Fund may engage in short sales only with
respect to securities listed on a national securities exchange. The Fund may
make short sales "against the box" without respect to such limitations. In this
type of short sale, at the time of the sale the Fund owns the security it has
sold short or has the immediate and unconditional right to acquire at no
additional cost the identical security.
- --------------------------------------------------------------------------------
OPTIONS, FUTURES AND
CURRENCY STRATEGIES
- --------------------------------------------------------------------------------
SPECIAL RISKS OF OPTIONS, FUTURES AND CURRENCY STRATEGIES
The use of options, futures contracts and forward currency contracts ("Forward
Contracts") involves special considerations and risks, as described below. Risks
pertaining to particular instruments are described in the sections that follow.
(1) Successful use of most of these instruments depends upon G.T.
Capital's ability to predict movements of the overall securities and
currency markets, which requires different skills than predicting changes in
the prices of individual securities. While G.T. Capital is experienced in
the use of these instruments, there can be no assurance that any particular
strategy adopted will succeed.
Statement of Additional Information Page 5
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G.T. GLOBAL EMERGING MARKETS FUND
(2) There might be imperfect correlation, or even no correlation,
between price movements of an instrument and price movements of the
investments being hedged. For example, if the value of an instrument used in
a short hedge increased by less than the decline in value of the hedged
investment, the hedge would not be fully successful. Such a lack of
correlation might occur due to factors unrelated to the value of the
investments being hedged, such as speculative or other pressures on the
markets in which the hedging instrument is traded. The effectiveness of
hedges using hedging instruments on indices will depend on the degree of
correlation between price movements in the index and price movements in the
investments being hedged.
(3) Hedging strategies, if successful, can reduce risk of loss by wholly
or partially offsetting the negative effect of unfavorable price movements
in the investments being hedged. However, hedging strategies can also reduce
opportunity for gain by offsetting the positive effect of favorable price
movements in the hedged investments. For example, if the Fund entered into a
short hedge because G.T. Capital projected a decline in the price of a
security in the Fund's portfolio, and the price of that security increased
instead, the gain from that increase might be wholly or partially offset by
a decline in the price of the hedging instrument. Moreover, if the price of
the hedging instrument declined by more than the increase in the price of
the security, the Fund could suffer a loss. In either such case, the Fund
would have been in a better position had it not hedged at all.
(4) As described below, the Fund might be required to maintain assets as
"cover," maintain segregated accounts or make margin payments when it takes
positions in instruments involving obligations to third parties (I.E.,
instruments other than purchased options). If the Fund were unable to close
out its positions in such instruments, it might be required to continue to
maintain such assets or accounts or make such payments until the position
expired or matured. The requirements might impair the Fund's ability to sell
a portfolio security or make an investment at a time when it would otherwise
be favorable to do so, or require that the Fund sell a portfolio security at
a disadvantageous time. The Fund's ability to close out a position in an
instrument prior to expiration or maturity depends on the existence of a
liquid secondary market or, in the absence of such a market, the ability and
willingness of the other party to the transaction ("contra party") to enter
into a transaction closing out the position. Therefore, there is no
assurance that any position can be closed out at a time and price that is
favorable to the Fund.
WRITING CALL OPTIONS
The Fund may write (sell) call options on securities, indices and currencies.
Call options generally will be written on securities and currencies that, in the
opinion of G.T. Capital, the Fund's investment manager, are not expected to make
any major price moves in the near future but that, over the long term, are
deemed to be attractive investments for the Fund.
A call option gives the holder (buyer) the right to purchase a security or
currency at a specified price (the exercise price) at any time until (American
style) or on (European style) a certain date (the expiration date). As long as
the obligation of the writer of a call option continues, he may be assigned an
exercise notice, requiring him to deliver the underlying security or currency
against payment of the exercise price. This obligation terminates upon the
expiration of the call option, or such earlier time at which the writer effects
a closing purchase transaction by purchasing an option identical to that
previously sold.
Portfolio securities or currencies on which call options may be written will be
purchased solely on the basis of investment considerations consistent with the
Fund's investment objectives. When writing a call option, the Fund, in return
for the premium, gives up the opportunity for profit from a price increase in
the underlying security or currency above the exercise price, and retains the
risk of loss should the price of the security or currency decline. Unlike one
who owns securities or currencies not subject to an option, the Fund has no
control over when it may be required to sell the underlying securities or
currencies, since most options may be exercised at any time prior to the
option's expiration. If a call option that the Fund has written expires, the
Fund will realize a gain in the amount of the premium; however, such gain may be
offset by a decline in the market value of the underlying security or currency
during the option period. If the call option is exercised, the Fund will realize
a gain or loss from the sale of the underlying security or currency, which will
be increased or offset by the premium received. The Fund does not consider a
security or currency covered by a call option to be "pledged" as that term is
used in the Fund's policy that limits the pledging or mortgaging of its assets.
Writing call options can serve as a limited short hedge because declines in the
value of the hedged investment would be offset to the extent of the premium
received for writing the option. However, if the security or currency
appreciates to a price higher than the exercise price of the call option, it can
be expected that the option will be exercised and the Fund will be obligated to
sell the security or currency at less than its market value.
Statement of Additional Information Page 6
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G.T. GLOBAL EMERGING MARKETS FUND
The premium that the Fund receives for writing a call option is deemed to
constitute the market value of an option. The premium the Fund will receive from
writing a call option will reflect, among other things, the current market price
of the underlying investment, the relationship of the exercise price to such
market price, the historical price volatility of the underlying investment, and
the length of the option period. In determining whether a particular call option
should be written. G.T. Capital will consider the reasonableness of the
anticipated premium and the likelihood that a liquid secondary market will exist
for those options.
Closing transactions will be effected in order to realize a profit on an
outstanding call option, to prevent an underlying security or currency from
being called, or to permit the sale of the underlying security or currency.
Furthermore, effecting a closing transaction will permit the Fund to write
another call option on the underlying security or currency with either a
different exercise price, expiration date or both.
The Fund will pay transaction costs in connection with the writing of options
and in entering into closing purchase contracts. Transaction costs relating to
options activity are normally higher than those applicable to purchases and
sales of portfolio securities.
The exercise price of the options may be below, equal to or above the current
market values of the underlying securities or currencies at the time the options
are written. From time to time, the Fund may purchase an underlying security or
currency for delivery in accordance with the exercise of an option, rather than
delivering such security or currency from its portfolio. In such cases,
additional costs will be incurred.
The Fund will realize a profit or loss from a closing purchase transaction if
the cost of the transaction is less or more, respectively, than the premium
received from writing the option. Because increases in the market price of a
call option generally will reflect increases in the market price of the
underlying security or currency, any loss resulting from the repurchase of a
call option is likely to be offset in whole or in part by appreciation of the
underlying security or currency owned by the Fund.
WRITING PUT OPTIONS
The Fund may write put options on securities, indices and currencies. A put
option gives the purchaser of the option the right to sell, and the writer
(seller) the obligation to buy, the underlying security or currency at the
exercise price at any time (American Style) or on (European Style) the
expiration date. The operation of put options in other respects, including their
related risks and rewards, is identical substantially to that of call options.
The Fund generally would write put options in circumstances where G.T. Capital
wishes to purchase the underlying security or currency for the Fund's portfolio
at a price lower than the current market price of the security or currency. In
such event, the Fund would write a put option at an exercise price that, reduced
by the premium received on the option, reflects the lower price it is willing to
pay. Since the Fund would also receive interest on debt securities or currencies
maintained to cover the exercise price of the option, this technique could be
used to enhance current return during periods of market uncertainty. The risk in
such a transaction would be that the market price of the underlying security or
currency would decline below the exercise price less the premium received.
Writing put options can serve as a limited long hedge because increases in the
value of the hedged investment would be offset to the extent of the premium
received for writing the option. However, if the security or currency
depreciates to a price lower than the exercise price of the put option, it can
be expected that the put option will be exercised and the Fund will be obligated
to purchase the security or currency at more than its market value.
PURCHASING PUT OPTIONS
The Fund may purchase put options on securities, indices and currencies. As the
holder of a put option, the Fund would have the right to sell the underlying
security or currency at the exercise price at any time until (American style) or
on (European style) the expiration date. The Fund may enter into closing sale
transactions with respect to such options, exercise them or permit them to
expire.
The Fund may purchase a put option on an underlying security or currency
("protective put") owned by the Fund in order to protect against an anticipated
decline in the value of the security or currency. Such hedge protection is
provided only during the life of the put option when the Fund, as the holder of
the put option, is able to sell the underlying security or currency at the put
exercise price regardless of any decline in the underlying security's market
price or currency's exchange value. For example, a put option may be purchased
in order to protect unrealized appreciation of a security or currency when G.T.
Capital deems it desirable to continue to hold the security or currency because
of tax considerations. The premium paid for the put option and any transaction
costs would reduce any profit otherwise available for distribution when the
security or currency is eventually sold.
Statement of Additional Information Page 7
<PAGE>
G.T. GLOBAL EMERGING MARKETS FUND
The Fund also may purchase put options at a time when the Fund does not own the
underlying security or currency. By purchasing put options on a security or
currency it does not own, the Fund seeks to benefit from a decline in the market
price of the underlying security or currency. If the put option is not sold when
it has remaining value, and if the market price of the underlying security or
currency remains equal to or greater than the exercise price during the life of
the put option, the Fund will lose its entire investment in the put option. In
order for the purchase of a put option to be profitable, the market price of the
underlying security or currency must decline sufficiently below the exercise
price to cover the premium and transaction costs, unless the put option is sold
in a closing sale transaction.
PURCHASING CALL OPTIONS
The Fund may purchase call options on securities, indices and currencies. As the
holder of a call option, the Fund would have the right to purchase the
underlying security or currency at the exercise price at any time until
(American style) or on (European style) the expiration date. The Fund may enter
into closing sale transactions with respect to such options, exercise them or
permit them to expire.
Call options may be purchased by the Fund for the purpose of acquiring the
underlying security or currency for its portfolio. Utilized in this fashion, the
purchase of call options would enable the Fund to acquire the security or
currency at the exercise price of the call option plus the premium paid. At
times, the net cost of acquiring the security or currency in this manner may be
less than the cost of acquiring the security or currency directly. This
technique also may be useful to the Fund in purchasing a large block of
securities that would be more difficult to acquire by direct market purchases.
So long as it holds such a call option, rather than the underlying security or
currency itself, the Fund is partially protected from any unexpected decline in
the market price of the underlying security or currency and, in such event,
could allow the call option to expire, incurring a loss only to the extent of
the premium paid for the option.
The Fund also may purchase call options on underlying securities or currencies
it owns in order to protect unrealized gains on call options previously written
by it. A call option could be purchased for this purpose where tax
considerations make it inadvisable to realize such gains through a closing
purchase transaction. Call options also may be purchased at times to avoid
realizing losses that would result in a reduction of the Fund's current return.
For example, where the Fund has written a call option on an underlying security
or currency having a current market value below the price at which such security
or currency was purchased by the Fund, an increase in the market price could
result in the exercise of the call option written by the Fund and the
realization of a loss on the underlying security or currency. Accordingly, the
Fund could purchase a call option on the same underlying security or currency,
which could be exercised to fulfill the Fund's delivery obligations under its
written call (if it is exercised). This strategy could allow the Fund to avoid
selling the portfolio security or currency at a time when it has an unrealized
loss; however, the Fund would have to pay a premium to purchase the call option
plus transaction costs.
Aggregate premiums paid for put and call options will not exceed 5% of the
Fund's total assets at the time of purchase.
The Fund may attempt to accomplish objectives similar to those involved in its
use of Forward Contracts by purchasing put or call options on currencies. A put
option gives the Fund as purchaser the right (but not the obligation) to sell a
specified amount of currency at the exercise price at any time until (American
style) or on (European style) the expiration date. A call option gives the Fund
as purchaser the right (but not the obligation) to purchase a specified amount
of currency at the exercise price at any time until (American style) or on
(European style) the expiratiaon date. The Fund might purchase a currency put
option, for example, to protect itself against a decline in the dollar value of
a currency in which it holds or anticipates holding securities. If the
currency's value should decline against the dollar, the loss in currency value
should be offset, in whole or in part, by an increase in the value of the put.
If the value of the currency instead should rise against the dollar, any gain to
the Fund would be reduced by the premium it had paid for the put option. A
currency call option might be purchased, for example, in anticipation of, or to
protect against, a rise in the value against the dollar of a currency in which
the Fund anticipates purchasing securities.
Options may be either listed on an exchange or traded over-the-counter ("OTC").
Listed options are third-party contracts (I.E., performance of the obligations
of the purchaser and seller is guaranteed by the exchange or clearing
corporation), and have standardized strike prices and expiration dates. OTC
options are two-party contracts with negotiated strike prices and expiration
dates. The Fund will not purchase an OTC option unless it believes that daily
valuations for such options are readily obtainable. OTC options differ from
exchange-traded options in that OTC options are transacted with dealers directly
and not through a clearing corporation (which guarantees performance).
Consequently, there is a risk of non-performance by the dealer. Since no
exchange is involved, OTC options are valued on the basis of a quote provided by
the dealer. In the case of OTC options, there can be no assurance that a liquid
secondary market will exist for any particular option at any specific time.
Statement of Additional Information Page 8
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G.T. GLOBAL EMERGING MARKETS FUND
The Securities and Exchange Commission ("SEC") staff considers purchased OTC
options to be illiquid securities. The Fund may also sell OTC options and, in
connection therewith, segregate assets or cover its obligations with respect to
OTC options written by the Fund. The assets used as cover for OTC options
written by the Fund will be considered illiquid unless the OTC options are sold
to qualified dealers who agree that the Fund may repurchase any OTC option it
writes at a maximum price to be calculated by a formula set forth in the option
agreement. The cover for an OTC option written subject to this procedure would
be considered illiquid only to the extent that the maximum repurchase price
under the formula exceeds the intrinsic value of the option.
The Fund's ability to establish and close out positions in exchange-listed
options depends on the existence of a liquid market. The Fund intends to
purchase or write only those exchange-traded options for which there appears to
be a liquid secondary market. However, there can be no assurance that such a
market will exist at any particular time. Closing transactions can be made for
OTC options only by negotiating directly with the contra party, or by a
transaction in the secondary market if any such market exists. Although the Fund
will enter into OTC options only with contra parties that are expected to be
capable of entering into closing transactions with the Fund, there is no
assurance that the Fund will in fact be able to close out an OTC option position
at a favorable price prior to expiration. In the event of insolvency of the
contra party, the Fund might be unable to close out an OTC option position at
any time prior to its expiration.
INDEX OPTIONS
Puts and calls on indices are similar to puts and calls on securities or futures
contracts except that all settlements are in cash and gain or loss depends on
changes in the index in question (and thus on price movements in the securities
market or a particular market sector generally) rather than on price movements
in individual securities or futures contracts. When the Fund writes a call on an
index, it receives a premium and agrees that, prior to the expiration date, the
purchaser of the call, upon exercise of the call, will receive from the Fund an
amount of cash if the closing level of the index upon which the call is based is
greater than the exercise price of the call. The amount of cash is equal to the
difference between the closing price of the index and the exercise price of the
call times a specified multiple (the "multiplier"), which determines the total
dollar value for each point of such difference. When the Fund buys a call on an
index, it pays a premium and has the same rights as to such call as are
indicated above. When the Fund buys a put on an index, it pays a premium and has
the right, prior to the expiration date, to require the seller of the put, upon
the Fund's exercise of the put, to deliver to the Fund an amount of cash if the
closing level of the index upon which the put is based is less than the exercise
price of the put, which amount of cash is determined by the multiplier, as
described above for calls. When the Fund writes a put on an index, it receives a
premium and the purchaser has the right, prior to the expiration date, to
require the Fund to deliver to it an amount of cash equal to the difference
between the closing level of the index and the exercise price times the
multiplier, if the closing level is less than the exercise price.
The risks of investment in index options may be greater than options on
securities. Because index options are settled in cash, when the Fund writes a
call on an index it cannot provide in advance for its potential settlement
obligations by acquiring and holding the underlying securities. The Fund can
offset some of the risk of writing a call index option position by holding a
diversified portfolio of securities similar to those on which the underlying
index is based. However, the Fund cannot, as a practical matter, acquire and
hold a portfolio containing exactly the same securities as underlie the index
and, as a result, bears a risk that the value of the securities held will vary
from the value of the index.
Even if the Fund could assemble a securities portfolio that exactly reproduced
the composition of the underlying index, it still would not be fully covered
from a risk standpoint because of the "timing risk" inherent in writing index
options. When an index option is exercised, the amount of cash that the holder
is entitled to receive is determined by the difference between the exercise
price and the closing index level on the date when the option is exercised. As
with other kinds of options, the Fund as the call writer will not know that it
has been assigned until the next business day at the earliest. The time lag
between exercise and notice of assignment poses no risk for the writer of a
covered call on a specific underlying security, such as common stock, because
there the writer's obligation is to deliver the underlying security, not to pay
its value as of a fixed time in the past. So long as the writer already owns the
underlying security, it can satisfy its settlement obligations by simply
delivering it, and the risk that its value may have declined since the exercise
date is borne by the exercising holder. In contrast, even if the writer of an
index call holds securities that exactly match the composition of the underlying
index, it will not be able to satisfy its assignment obligations by delivering
those securities against payment of the exercise price. Instead, it will be
required to pay cash in an amount based on the closing index value on the
exercise date; and by the time it learns that it has been assigned, the index
may have declined, with a corresponding decline in the value of its securities
portfolio. This "timing risk" is an inherent limitation on the ability of index
call writers to cover their risk exposure by holding securities positions.
Statement of Additional Information Page 9
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G.T. GLOBAL EMERGING MARKETS FUND
If the Fund has purchased an index option and exercises it before the closing
index value for that day is available, it runs the risk that the level of the
underlying index may subsequently change. If such a change causes the exercised
option to fall out-of-the-money, the Fund will be required to pay the difference
between the closing index value and the exercise price of the option (times the
applicable multiplier) to the assigned writer.
INTEREST RATE AND CURRENCY FUTURES CONTRACTS
The Fund may enter into interest rate or currency futures contracts, and may
enter into stock index Futures Contracts (collective "Futures" or "Futures
Contracts"), as a hedge against changes in prevailing levels of interest rates,
currency exchange rates or stock prices in order to establish more definitely
the effective return on securities or currencies held or intended to be acquired
by the Fund. The Fund's transactions may include sales of Futures as an offset
against the effect of expected increases in interest rates, and decreases in
currency exchange rates and stock prices, and purchases of Futures as an offset
against the effect of expected declines in interest rates, and increases in
currency exchange rates and stock prices.
The Fund will only enter into Futures Contracts that are traded on futures
exchanges and are standardized as to maturity date and underlying financial
instrument. Futures exchanges and trading thereon in the United States are
regulated under the Commodity Exchange Act by the Commodity Futures Trading
Commission ("CFTC"). Futures are exchanged in London at the London International
Financial Futures Exchange.
Although techniques other than sales and purchases of Futures Contracts could be
used to reduce the Fund's exposure to interest rate, currency exchange rate and
stock market fluctuations, the Fund may be able to hedge its exposure more
effectively and at a lower cost through using Futures Contracts.
A Futures Contract provides for the future sale by one party and purchase by
another party of a specified amount of a specific financial instrument (security
or currency) for a specified price at a designated date, time and place. An
index Futures Contract provides for the delivery, at a designated date, time and
place, of an amount of cash equal to a specified dollar amount times the
difference between the index value at the close of trading on the contract and
the price at which the Futures Contract is originally struck; no physical
delivery of the securities comprising the index is made. Brokerage fees are
incurred when a Futures Contract is bought or sold, and margin deposits must be
maintained at all times the Futures Contract is outstanding.
Although Futures Contracts typically require future delivery of and payment for
financial instruments or currencies, Futures Contracts are usually closed out
before the delivery date. Closing out an open Futures Contract sale or purchase
is effected by entering into an offsetting Futures Contract purchase or sale,
respectively, for the same aggregate amount of the identical financial
instrument or currency and the same delivery date. If the offsetting purchase
price is less than the original sale price, the Fund realizes a gain; if it is
more, the Fund realizes a loss. Conversely, if the offsetting sale price is more
than the original purchase price, the Fund realizes a gain; if it is less, the
Fund realizes a loss. The transaction costs must also be included in these
calculations. There can be no assurance, however, that the Fund will be able to
enter into an offsetting transaction with respect to a particular Futures
Contract at a particular time. If the Fund is not able to enter into an
offsetting transaction, the Fund will continue to be required to maintain the
margin deposits on the Futures Contract.
As an example of an offsetting transaction, the contractual obligations arising
from the sale of one Futures Contract of September Deutschemarks on an exchange
may be fulfilled at any time before delivery under the Futures Contract is
required (I.E., on a specified date in September, the "delivery month") by the
purchase of another Futures Contract of September Deutschemarks on the same
exchange. In such instance the difference between the price at which the Futures
Contract was sold and the price paid for the offsetting purchase, after
allowance for transaction costs, represents the profit or loss to the Fund.
The Fund's Futures transactions will be entered into for hedging purposes; that
is, Futures Contracts will be sold to protect against a decline in the price of
securities or currencies that the Fund owns, or Futures Contracts will be
purchased to protect the Fund against an increase in the price of securities or
currencies it has committed to purchase or expects to purchase.
"Margin" with respect to Futures Contracts is the amount of funds that must be
deposited by the Fund in order to initiate Futures trading and to maintain the
Fund's open positions in Futures Contracts. A margin deposit made when the
Futures Contract is entered into ("initial margin") is intended to assure the
Fund's performance under the Futures Contract. The margin required for a
particular Futures Contract is set by the exchange on which the Futures Contract
is traded and may be modified significantly from time to time by the exchange
during the term of the Futures Contract.
Statement of Additional Information Page 10
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G.T. GLOBAL EMERGING MARKETS FUND
Subsequent payments, called "variation margin," to and from the futures
commission merchant through which the Fund entered into the Futures Contract
will be made on a daily basis as the price of the underlying security, currency
or index fluctuates making the Futures Contract more or less value, a process
known as marking-to-market.
RISKS OF USING FUTURES CONTRACTS. The prices of Futures Contracts are
volatile and are influenced, among other things, by actual and anticipated
changes in interest rates and currency exchange rates, and in stock market
movements, which in turn are affected by fiscal and monetary policies and
national and international political and economic events.
There is a risk of imperfect correlation between changes in prices of Futures
Contracts and prices of the securities or currencies in the Fund's portfolio
being hedged. The degree of imperfection of correlation depends upon
circumstances such as: variations in speculative market demand for futures and
for securities or currencies, including technical influences in Futures trading;
and differences between the financial instruments being hedged and the
instruments underlying the standard Futures Contracts available for trading. A
decision of whether, when, and how to hedge involves skill and judgment, and
even a well-conceived hedge may be unsuccessful to some degree because of
unexpected market behavior or interest or currency rate trends.
Because of the low margin deposits required, Futures trading involves an
extremely high degree of leverage. As a result, a relatively small price
movement in a Futures Contract may result in immediate and substantial loss, as
well as gain, to the investor. For example, if at the time of purchase, 10% of
the value of the Futures Contract is deposited as margin, a subsequent 10%
decrease in the value of the Futures Contract would result in a total loss of
the margin deposit, before any deduction for the transaction costs, if the
account were then closed out. A 15% decrease would result in a loss equal to
150% of the original margin deposit, if the Futures Contract were closed out.
Thus, a purchase or sale of a Futures Contract may result in losses in excess of
the amount invested in the Futures Contract.
Most U.S. Futures exchanges limit the amount of fluctuation permitted in Futures
Contract and options on Futures Contract prices during a single trading day. The
daily limit establishes the maximum amount that the price of a Futures Contract
or option may vary either up or down from the previous day's settlement price at
the end of a trading session. Once the daily limit has been reached in a
particular type of Futures Contract or option, no trades may be made on that day
at a price beyond that limit. The daily limit governs only price movement during
a particular trading day and therefore does not limit potential losses, because
the limit may prevent the liquidation of unfavorable positions. Futures Contract
and option prices have occasionally moved to the daily limit for several
consecutive trading days with little or no trading, thereby preventing prompt
liquidation of positions and subjecting some traders to substantial losses.
If the Fund were unable to liquidate a Futures or option on Futures position due
to the absence of a liquid secondary market or the imposition of price limits,
it could incur substantial losses. The Fund would continue to be subject to
market risk with respect to the position. In addition, except in the case of
purchased options, the Fund would continue to be required to make daily
variation margin payments and might be required to maintain the position being
hedged by the Future or option or to maintain cash or securities in a segregated
account.
Certain characteristics of the Futures market might increase the risk that
movements in the prices of Futures Contracts or options on Futures might not
correlate perfectly with movements in the prices of the investments being
hedged. For example, all participants in the Futures and options on Futures
markets are subject to daily variation margin calls and might be compelled to
liquidate Futures or options on Futures positions whose prices are moving
unfavorably to avoid being subject to further calls. These liquidations could
increase price volatility of the instruments and distort the normal price
relationship between the Futures or options and the investments being hedged.
Also, because initial margin deposit requirements in the Futures market are less
onerous than margin requirements in the securities markets, there might be
increased participation by speculators in the Futures markets. This
participation also might cause temporary price distortions. In addition,
activities of large traders in both the Futures and securities markets involving
arbitrage, "program trading" and other investment strategies might result in
temporary price distortions.
OPTIONS ON FUTURES CONTRACTS
Options on Futures Contracts are similar to options on securities or currencies
except that options on Futures Contracts give the purchaser the right, in return
for the premium paid, to assume a position in a Futures Contract (a long
position if the option is a call and a short position if the option is a put) at
a specified exercise price at any time during the period of the option. Upon
exercise of the option, the delivery of the Futures position by the writer of
the option to the holder of the option will be accompanied by delivery of the
accumulated balance in the writer's Futures margin account, which represents the
amount by which the market price of the Futures Contract, at exercise, exceeds
(in the case of a call) or is less than (in the case of a put) the exercise
price of the option on the Futures Contract. If an option is exercised on the
last trading day prior to the expiration date of the option, the settlement will
be made entirely in cash equal to the difference
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G.T. GLOBAL EMERGING MARKETS FUND
between the exercise price of the option and the closing level of the
securities, currencies or index upon which the Futures Contract is based on the
expiration date. Purchasers of options who fail to exercise their options prior
to the exercise date suffer a loss of the premium paid.
The purchase of call options on Futures can serve as a long hedge, and the
purchase of put options on Futures can serve as a short hedge. Writing call
options on Futures can serve as a limited short hedge, and writing put options
on Futures can serve as a limited long hedge, using a strategy similar to that
used for writing options on securities, foreign currencies or indices.
If the Fund writes an option on a Futures Contract, it will be required to
deposit initial and variation margin pursuant to requirements similar to those
applicable to Futures Contracts. Premiums received from the writing of an option
on a Futures Contract are included in the initial margin deposit.
The Fund may seek to close out an option position by selling an option covering
the same Futures Contract and having the same exercise price and expiration
date. The ability to establish and close out positions on such options is
subject to the maintenance of a liquid secondary market.
LIMITATION ON USE OF FUTURES, OPTIONS ON FUTURES AND CERTAIN OPTIONS ON
CURRENCIES
To the extent that the Fund enters into Futures Contracts, options on Futures
Contracts, and options on foreign currencies traded on a CFTC-regulated
exchange, in each case other than for BONA FIDE hedging purposes (as defined by
the CFTC), the aggregate initial margin and premiums required to establish those
positions (excluding the amount by which options are "in-the-money") will not
exceed 5% of the liquidation value of the Fund's portfolio, after taking into
account unrealized profits and unrealized losses on any contracts the Fund has
entered into. In general, a call option on a Futures Contract is "in-the-money"
if the value of the underlying Futures Contract exceeds the strike, I.E.,
exercise, price of the call; a put option on a Futures Contract is
"in-the-money" if the value of the underlying Futures Contract is exceeded by
the strike price of the put. This guideline may be modified by the Company's
Board of Directors without a shareholder vote. This limitation does not limit
the percentage of the Fund's assets at risk to 5%.
FORWARD CURRENCY CONTRACTS
A Forward Contract is an obligation, usually arranged with a commercial bank or
other currency dealer, to purchase or sell a currency against another currency
at a future date and price as agreed upon by the parties. The Fund may either
accept or make delivery of the currency at the maturity of the Forward Contract.
The Fund may also, if its contra party agrees, prior to maturity, enter into a
closing transaction involving the purchase or sale of an offsetting contract.
The Fund engages in forward currency transactions in anticipation of, or to
protect itself against, fluctuations in exchange rates. The Fund might sell a
particular foreign currency forward, for example, when it holds securities
denominated in a foreign currency but anticipates, and seeks to be protected
against, a decline in the currency against the U.S. dollar. Similarly, the Fund
might sell the U.S. dollar forward when it holds securities denominated in U.S.
dollars, but anticipates, and seeks to be protected against, a decline in the
U.S. dollar relative to other currencies. Further, the Fund might purchase a
currency forward to "lock in" the price of securities denominated in that
currency that it anticipates purchasing.
Forward Contracts are traded in the interbank market conducted directly between
currency traders (usually large commercial banks) and their customers. A Forward
Contract generally has no deposit requirement, and no commissions are charged at
any stage for trades. The Fund will enter into such Forward Contracts with major
U.S. or foreign banks and securities or currency dealers in accordance with
guidelines approved by the Company's Board of Directors.
The Fund may enter into Forward Contracts either with respect to specific
transactions or with respect to the Fund's portfolio positions. The precise
matching of the Forward Contract amounts and the value of specific securities
will not generally be possible because the future value of such securities in
foreign currencies will change as a consequence of market movements in the value
of those securities between the date the Forward Contract is entered into and
the date it matures. Accordingly, it may be necessary for the Fund to purchase
additional foreign currency on the spot (I.E., cash) market (and bear the
expense of such purchase) if the market value of the security is less than the
amount of foreign currency the Fund is obligated to deliver and if a decision is
made to sell the security and make delivery of the foreign currency. Conversely,
it may be necessary to sell on the spot market some of the foreign currency the
Fund is obligated to deliver. The projection of short-term currency market
movements is extremely difficult, and the successful execution of a short-term
hedging strategy is highly uncertain. Forward Contracts involve the risk that
anticipated currency movements will not be accurately predicted, causing the
Fund to sustain losses on these contracts and transaction costs.
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G.T. GLOBAL EMERGING MARKETS FUND
At or before the maturity of a Forward Contract requiring the Fund to sell a
currency, the Fund may either sell a portfolio security and use the sale
proceeds to make delivery of the currency or retain the security and offset its
contractual obligation to deliver the currency by purchasing a second contract
pursuant to which the Fund will obtain, on the same maturity date, the same
amount of the currency that it is obligated to deliver. Similarly, the Fund may
close out a Forward Contract requiring it to purchase a specified currency by,
if its contra party agrees, entering into a second contract entitling it to sell
the same amount of the same currency on the maturity date of the first contract.
The Fund would realize a gain or loss as a result of entering into such an
offsetting Forward Contract under either circumstance to the extent the exchange
rate or rates between the currencies involved moved between the execution dates
of the first contract and the offsetting contract.
The cost to the Fund of engaging in Forward Contracts varies with factors such
as the currencies involved, the length of the contract period and the market
conditions then prevailing. Because Forward Contracts usually are entered into
on a principal basis, no fees or commissions are involved. The use of Forward
Contracts does not eliminate fluctuations in the prices of the underlying
securities the Fund owns or intends to acquire, but it does establish a rate of
exchange in advance. In addition, while Forward Contract sales limit the risk of
loss due to a decline in the value of the hedged currencies, they also limit any
potential gain that might result should the value of the currencies increase.
FOREIGN CURRENCY STRATEGIES -- SPECIAL CONSIDERATIONS
The Fund may use options on foreign currencies, Futures on foreign currencies,
options on Futures on foreign currencies and Forward Contracts to hedge against
movements in the values of the foreign currencies in which the Fund's securities
are denominated. Such currency hedges can protect against price movements in a
security that the Fund owns or intends to acquire that are attributable to
changes in the value of the currency in which it is denominated. Such hedges do
not, however, protect against price movements in the securities that are
attributable to other causes.
The Fund might seek to hedge against changes in the value of a particular
currency when no Futures Contract, Forward Contract or option involving that
currency is available or one of such contracts is more expensive than certain
other contracts. In such cases, the Fund may hedge against price movements in
that currency by entering into a contract on another currency or basket of
currencies, the values of which G.T. Capital believes will have a positive
correlation to the value of the currency being hedged. The risk that movements
in the price of the contract will not correlate perfectly with movements in the
price of the currency being hedged is magnified when this strategy is used.
The value of Futures Contracts, options on Futures Contracts, Forward Contracts
and options on foreign currencies depends on the value of the underlying
currency relative to the U.S. dollar. Because foreign currency transactions
occurring in the interbank market might involve substantially larger amounts
than those involved in the use of Futures Contracts, Forward Contracts or
options, the Fund could be disadvantaged by dealing in the odd lot market
(generally consisting of transactions of less than $1 million) for the
underlying foreign currencies at prices that are less favorable than for round
lots.
There is no systematic reporting of last sale information for foreign currencies
or any regulatory requirements that quotations available through dealers or
other market sources be firm or revised on a timely basis. Quotation information
generally is representative of very large transactions in the interbank market
and thus might not reflect odd-lot transactions where rates might be less
favorable. The interbank market in foreign currencies is a global,
round-the-clock market. To the extent the U.S. options or Futures markets are
closed while the markets for the underlying currencies remain open, significant
price and rate movements might take place in the underlying markets that cannot
be reflected in the markets for the Futures contracts or options until they
reopen.
Settlement of Futures Contracts, Forward Contracts and options involving foreign
currencies might be required to take place within the country issuing the
underlying currency. Thus, the Fund might be required to accept or make delivery
of the underlying foreign currency in accordance with any U.S. or foreign
regulations regarding the maintenance of foreign banking arrangements by U.S.
residents and might be required to pay any fees, taxes and charges associated
with such delivery assessed in the issuing country.
COVER
Transactions using Forward Contracts, Futures Contracts and options (other than
options that the Fund has purchased) expose the Fund to an obligation to another
party. The Fund will not enter into any such transactions unless it owns either
(1) an offsetting ("covered") position in securities, currencies, or other
options, Forward Contracts or Futures Contracts, or (2) cash, receivables and
short-term debt securities with a value sufficient at all times to cover its
potential obligations not covered as provided in (1) above. The Fund will comply
with SEC guidelines regarding cover for these instruments and, if
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<PAGE>
G.T. GLOBAL EMERGING MARKETS FUND
the guidelines so require, set aside cash, U.S. government securities or other
liquid, high-grade debt securities in a segregated account with its custodian in
the prescribed amount.
Assets used as cover or held in a segregated account cannot be sold while the
position in the corresponding Forward Contract, Futures Contract or option is
open, unless they are replaced with other appropriate assets. If a large portion
of the Fund's assets are used for cover or segregated accounts, it could affect
portfolio management or the Fund's ability to meet redemption requests or other
current obligations.
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RISK FACTORS
- --------------------------------------------------------------------------------
SPECIAL CONSIDERATIONS AFFECTING EMERGING MARKETS. Investing in equity
securities of companies in emerging markets may entail greater risks than
investing in equity securities in developed countries. These risks include (i)
less social, political and economic stability; (ii) the small current size of
the markets for such securities and the currently low or nonexistent volume of
trading, which result in a lack of liquidity and in greater price volatility;
(iii) certain national policies which may restrict the Fund's investment
opportunities, including restrictions on investment in issuers or industries
deemed sensitive to national interests; (iv) foreign taxation; and (v) the
absence of developed structures governing private or foreign investment or
allowing for judicial redress for injury to private property. Investing in the
securities of companies in emerging markets, including the markets of Latin
America and certain Asian markets such as Taiwan, Malaysia and Indonesia, may
entail special risks relating to the potential political and economic
instability and the risks of expropriation, nationalization, confiscation or the
imposition of restrictions on foreign investment, convertibility of currencies
into U.S. dollars and on repatriation of the capital invested. In the event of
such expropriation, nationalization or other confiscation by any country, the
Fund could lose its entire investment in any such country.
Settlement mechanisms in emerging securities markets may be less efficient and
reliable than in more developed markets. In such emerging securities markets
there may be share registration and delivery delays or failures.
Most Latin American countries have experienced substantial, and in some periods
extremely high, rates of inflation for many years. Inflation and rapid
fluctuations in inflation rates and corresponding currency devaluations have had
and may continue to have negative effects on the economies and securities
markets of certain Latin American countries.
POLITICAL, SOCIAL AND ECONOMIC RISKS. Investing in securities of non-U.S.
companies may entail additional risks due to the potential political, social and
economic instability of certain countries and the risks of expropriation,
nationalization, confiscation or the imposition of restrictions on foreign
investment, convertibility of currencies into U.S. dollars and on repatriation
of capital invested. In the event of such expropriation, nationalization or
other confiscation by any country, the Fund could lose its entire investment in
any such country.
In addition, even though opportunities for investment may exist in emerging
markets, any change in the leadership or policies of the governments of those
countries or in the leadership or policies of any other government which
exercises a significant influence over those countries, may halt the expansion
of or reverse the liberalization of foreign investment policies now occurring
and thereby eliminate any investment opportunities which may currently exist.
Investors should note that upon the accession to power of authoritarian regimes,
the governments of a number of Latin American countries previously expropriated
large quantities of real and personal property similar to the property which
will be represented by the securities purchased by the Fund. The claims of
property owners against those governments were never finally settled. There can
be no assurance that any property represented by securities purchased by the
Fund will not also be expropriated, nationalized, or otherwise confiscated. If
such confiscation were to occur, the Fund could lose its entire investment in
such countries. The Fund's investments would similarly be adversely affected by
exchange control regulation in any of those countries.
Certain countries in which the Fund may invest may have groups that advocate
radical religious or revolutionary philosophies or support ethnic independence.
Any disturbance on the part of such individuals could carry the potential for
widespread destruction or confiscation of property owned by individuals and
entities foreign to such country and could cause the loss of the Fund's
investment in those countries. Instability may also result from, among other
things: (i) authoritarian governments or military involvement in political and
economic decision-making, including changes in
Statement of Additional Information Page 14
<PAGE>
G.T. GLOBAL EMERGING MARKETS FUND
government through extra-constitutional means; (ii) popular unrest associated
with demands for improved political, economic and social conditions; and (iii)
hostile relations with neighboring or other countries. Such political, social
and economic instability could disrupt the principal financial markets in which
the Fund invests and adversely affect the value of the Fund's assets.
ILLIQUID SECURITIES. The Fund may invest up to 15% of its net assets in
illiquid securities. Securities may be considered illiquid if the Fund cannot
reasonably expect within seven days to sell the securities for approximately the
amount at which the Fund values such securities. See "Investment Limitations."
The sale of illiquid securities, if they can be sold at all, generally will
require more time and result in higher brokerage charges or dealer discounts and
other selling expenses than the sale of liquid securities such as securities
eligible for trading on U.S. securities exchanges or in the over-the-counter
markets. Moreover, restricted securities, which may be illiquid for purposes of
this limitation, often sell, if at all, at a price lower than similar securities
that are not subject to restrictions on resale.
With respect to liquidity determinations generally, the Company's Board of
Directors has the ultimate responsibility for determining whether specific
securities, including restricted securities pursuant to Rule 144A under the
Securities Act of 1933 ("1933 Act"), are liquid or illiquid. The Board has
delegated the function of making day-to-day determinations of liquidity to G.T.
Capital, in accordance with procedures approved by the Company's Board of
Directors. G.T. Capital takes into account a number of factors in reaching
liquidity decisions, including, but not limited to: (i) the frequency of trading
in the security; (ii) the number of dealers who make quotes for the security:
(iii) the number of dealers who have undertaken to make a market in the
security; (iv) the number of other potential purchasers; and (v) the nature of
the security and how trading is affected (e.g., the time needed to sell the
security, how offers are solicited and the mechanics of transfer). G.T. Capital
monitors the liquidity of securities in the Fund's portfolio and periodically
reports on such decisions to the Board of Directors.
FOREIGN INVESTMENT RESTRICTIONS. Certain countries prohibit or impose
substantial restrictions on investments in their capital markets, particularly
their equity markets, by foreign entities such as the Fund. These restrictions
or controls may at times limit or preclude investment in certain securities and
may increase the cost and expenses of the Fund. For example, certain countries
require prior governmental approval before investments by foreign persons may be
made, or may limit the amount of investment by foreign persons in a particular
company, or may limit the investment by foreign persons to only a specific class
of securities of a company that may have less advantageous terms than securities
of the company available for purchase by nationals. Moreover, the national
policies of certain countries may restrict investment opportunities in issuers
or industries deemed sensitive to national interests. In addition, some
countries require governmental approval for the repatriation of investment
income, capital or the proceeds of securities sales by foreign investors. In
addition, if there is a deterioration in a country's balance of payments or for
other reasons, a country may impose restrictions on foreign capital remittances
abroad. The Fund could be adversely affected by delays in, or a refusal to
grant, any required governmental approval for repatriation, as well as by the
application to it of other restrictions on investments.
NON-UNIFORM CORPORATE DISCLOSURE STANDARDS AND GOVERNMENTAL
REGULATION. Foreign companies are subject to accounting, auditing and financial
standards and requirements that differ, in some cases significantly, from those
applicable to U.S. companies. In particular, the assets, liabilities and profits
appearing on the financial statements of such a company may not reflect its
financial position or results of operations in the way they would be reflected
had such financial statements been prepared in accordance with U.S. generally
accepted accounting principles. Most of the securities held by the Fund will not
be registered with the SEC or regulators of any foreign country, nor will the
issuers thereof be subject to the SEC's reporting requirements. Thus, there will
be less available information concerning most foreign issuers of securities held
by the Fund than is available concerning U.S. issuers. In instances where the
financial statements of an issuer are not deemed to reflect accurately the
financial situation of the issuer, G.T. Capital will take appropriate steps to
evaluate the proposed investment, which may include on-site inspection of the
issuer, interviews with its management and consultations with accountants,
bankers and other specialists. There is substantially less publicly available
information about foreign companies than there are reports and ratings published
about U.S. companies and the U.S. government. In addition, where public
information is available, it may be less reliable than such information
regarding U.S. issuers. Issuers of securities in foreign jurisdictions are
generally not subject to the same degree of regulation as are U.S. issuers with
respect to such matters as restrictions on market manipulation, insider trading
rules, shareholder proxy requirements and timely disclosure information.
CURRENCY FLUCTUATIONS. Because the Fund, under normal circumstances, will
invest a substantial portion of its total assets in the securities of foreign
issuers which are denominated in foreign currencies, the strength or weakness of
the U.S. dollar against such foreign currencies will account for part of the
Fund's investment performance. A decline in the value of
Statement of Additional Information Page 15
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G.T. GLOBAL EMERGING MARKETS FUND
any particular currency against the U.S. dollar will cause a decline in the U.S.
dollar value of the Fund's holdings of securities and cash denominated in such
currency and, therefore, will cause an overall decline in the Fund's net asset
value and any net investment income and capital gains derived from such
securities to be distributed in U.S. dollars to shareholders of the Fund.
Moreover, if the value of the foreign currencies in which the Fund receives its
income falls relative to the U.S. dollar between receipt of the income and the
making of Fund distributions, the Fund may be required to liquidate securities
in order to make distributions if the Fund has insufficient cash in U.S. dollars
to meet distribution requirements.
The rate of exchange between the U.S. dollar and other currencies is determined
by several factors including the supply and demand for particular currencies,
central bank efforts to support particular currencies, the relative movement of
interest rates and pace of business activity in the other countries, and the
U.S., and other economic and financial conditions affecting the world economy.
Although the Fund values its assets daily in terms of U.S. dollars, the Fund
does not intend to convert its holdings of foreign currencies into U.S. dollars
on a daily basis. The Fund will do so from time to time, and investors should be
aware of the costs of currency conversion. Although foreign exchange dealers do
not charge a fee for conversion, they do realize a profit based on the
difference ("spread") between the prices at which they are buying and selling
various currencies. Thus, a dealer may offer to sell a foreign currency to the
Fund at one rate, while offering a lesser rate of exchange should the Fund
desire to sell that currency to the dealer.
ADVERSE MARKET CHARACTERISTICS. Securities of many foreign issuers may be
less liquid and their prices more volatile than securities of comparable U.S.
issuers. In addition, foreign securities markets and brokers are generally
subject to less governmental supervision and regulation than in the United
States, and foreign securities transactions are usually subject to fixed
commissions, which are generally higher than negotiated commissions on U.S.
transactions. In addition, foreign securities transactions may be subject to
difficulties associated with the settlement of such transactions Delays in
settlement could result in temporary periods when assets of the Fund are
uninvested and no return is earned thereon. The inability of the Fund to make
intended security purchases due to settlement problems could cause the Fund to
miss attractive investment opportunities. Inability to dispose of a portfolio
security due to settlement problems either could result in losses to the Fund
due to subsequent declines in value of the portfolio security or, if the Fund
has entered into a contract to sell the security, could result in possible
liability to the purchaser. G.T. Capital will consider such difficulties when
determining the allocation of the Fund's assets, although G.T. Capital does not
believe that such difficulties will have a material adverse effect on the Fund's
portfolio trading activities.
The Fund may use foreign custodians, which may involve risks in addition to
those related to the use of U.S. custodians. Such risks include uncertainties
relating to: (i) determining and monitoring the financial strength, reputation
and standing of the foreign custodian; (ii) maintaining appropriate safeguards
to protect the Fund's investments and (iii) possible difficulties in obtaining
and enforcing judgments against such custodians.
WITHHOLDING TAXES. The Fund's net investment income from foreign issuers may
be subject to withholding taxes by the foreign issuer's country, thereby
reducing the Fund's net investment income or delaying the receipt of income
where those taxes may be recaptured. See "Taxes."
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INVESTMENT LIMITATIONS
- --------------------------------------------------------------------------------
The Fund has adopted the following investment limitations as fundamental
policies which (unless otherwise noted) may not be changed without approval by
the holders of the lesser of (i) 67% of the Fund's shares represented at a
meeting at which more than 50% of the outstanding shares are represented, and
(ii) more than 50% of the outstanding shares.
The Fund may not:
(1) Invest 25% or more of the value of its total assets in the
securities of issuers conducting their principal business activities in the
same industry, except that this limitation shall not apply to securities
issued or guaranteed as to principal and interest by the U.S. Government or
any of its agencies or instrumentalities;
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G.T. GLOBAL EMERGING MARKETS FUND
(2) Purchase or sell real estate, provided that the Fund may invest in
securities secured by real estate or interests therein or issued by
companies that invest in real estate or interests therein;
(3) Purchase or sell commodities or commodity contracts, except that the
Fund may purchase and sell financial and currency futures contracts and
options thereon, and may purchase and sell currency forward contracts,
options on foreign currencies and may otherwise engage in transactions in
foreign currencies;
(4) Underwrite securities of other issuers, except to the extent that,
in connection with the disposition of portfolio securities, the Fund may be
deemed an underwriter under federal or state securities laws;
(5) Make loans, except that the Fund may purchase debt securities and
enter into repurchase agreements and make loans of portfolio securities;
(6) Purchase securities on margin, provided that the Fund may obtain
such short-term credits as may be necessary for the clearance of purchases
and sales of securities; except that it may make margin deposits in
connection with the use of options, futures contracts, options thereon or
forward currency contracts. The Fund may make deposits of margin in
connection with futures and forward contracts and options thereon;
(7) Borrow money in excess of 33 1/3% of the Fund's total assets
(including the amount borrowed), less all liabilities and indebtedness
(other than borrowing). Transactions involving options, futures contracts,
options on futures contracts and forward currency contracts, and collateral
arrangements relating thereto will not be deemed to be borrowings.
(8) Mortgage, pledge, or in any other manner transfer as security for
any indebtedness any of its assets, except to secure permitted borrowings.
Collateral arrangements with respect to initial or variation margin for
futures contracts will not be deemed to be a pledge of the Fund's assets;
(9) Invest in direct interests or leases in oil, gas, or other mineral
exploration or development programs, however, the Fund may invest in
securities of companies that engage in these activities; or
(10) With respect to 75% of its total assets, invest more than 5% of its
assets in the securities of any one issuer or purchase more than 10% of the
outstanding voting securities of any one issuer.
For purposes of concentration policy of the Fund contained in limitation (1)
above, the Fund intends to comply with the SEC staff position that securities
issued or guaranteed as to principal and interest by any single foreign
government or any supranational organizations in the aggregate are considered to
be securities of issuers in the same industry.
The following operating policies of the Fund are not fundamental policies and
may be changed by vote of a majority of the Company's Board of Directors without
shareholder approval. The Fund may not:
(1) Invest in securities of an issuer if the investment would cause the
Fund to own more than 10% of any class of securities of any one issuer;
(2) Invest in companies for the purpose of exercising control or
management;
(3) Purchase or retain the securities of any issuer, if, to the Fund's
knowledge, one or more of the officers or Directors of the Fund, its
investment adviser, or distributor, each own beneficially more than 1/2 of
1% of the securities of such issuer and together own beneficially more than
5% of the securities of such issuer;
(4) Enter into a futures contract, an option on a futures contract, or
an option on foreign currency traded on a CFTC-regulated exchange, in each
case other than for BONA FIDE hedging purposes (as defined by the CFTC), if
the aggregate initial margin and premiums required to establish all of those
positions (excluding the amount by which options are "in-the-money") exceeds
5% of the liquidation value of the Fund's portfolio, after taking into
account unrealized profits and unrealized losses on any contracts the Fund
has entered into;
(5) Borrow money except for temporary or emergency purposes (not for
leveraging) not in excess of 33 1/3% of the value of the Fund's total
assets, except that the Fund may purchase securities when outstanding
borrowings represent less than 5% of the Fund's assets;
(6) Invest more than 5% of its total assets in securities of companies
having, together with their predecessors, a record of less than three years
of continuous operation; or
(7) Invest more than 10% of its total assets in securities that are
restricted as to resale without registration under the 1933 Act.
Statement of Additional Information Page 17
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G.T. GLOBAL EMERGING MARKETS FUND
Investors should refer to the Prospectus for further information with respect to
the Fund's investment objective, which may not be changed without the approval
of the shareholders, and other investment policies, techniques and limitations,
which may be changed without shareholder approval.
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EXECUTION OF PORTFOLIO
TRANSACTIONS
- --------------------------------------------------------------------------------
Subject to policies established by the Company's Board of Directors, G.T.
Capital is responsible for the execution of the Fund's portfolio transactions
and the selection of brokers and dealers who execute such transactions on behalf
of the Fund. In executing portfolio transactions, G.T. Capital seeks the best
net results for the Fund, taking into account such factors as the price
(including the applicable brokerage commission or dealer spread), size of the
order, difficulty of execution and operational facilities of the firm involved.
Although G.T. Capital generally seeks reasonably competitive commission rates
and spreads, payment of the lowest commission or spread is not necessarily
consistent with the best net results. While the Fund may engage in soft dollar
arrangements for research services, as described below, the Fund has no
obligation to deal with any broker/dealer or group of broker/dealers in the
execution of portfolio transactions.
Consistent with the interests of the Fund, G.T. Capital may select brokers to
execute the Fund's portfolio transactions on the basis of the research services
they provide to G.T. Capital for its use in managing the Fund and its other
advisory accounts. Such services may include furnishing analyses, reports and
information concerning issuers, industries, securities, geographic regions,
economic factors and trends, portfolio strategy, and performance of accounts;
and effecting securities transactions and performing functions incidental
thereto (such as clearance and settlement). Research and brokerage services
received from such brokers are in addition to, and not in lieu of, the services
required to be performed by G.T. Capital under the Management Contract (defined
below). A commission paid to such brokers may be higher than that which another
qualified broker would have charged for effecting the same transaction, provided
that G.T. Capital determines in good faith that such commission is reasonable in
terms either of that particular transaction or the overall responsibility of
G.T. Capital to the Fund and its other clients and that the total commissions
paid by the Fund will be reasonable in relation to the benefits received by the
Fund over the long term. Research services may also be received from dealers who
execute Fund transactions.
G.T. Capital may allocate brokerage transactions to broker/dealers who have
entered into arrangements under which the broker/dealer allocates a portion of
the commissions paid by the Fund toward payment of the Fund's expenses, such as
transfer agent and custodian fees.
Investment decisions for the Fund and for other investment accounts managed by
G.T. Capital are made independently of each other in light of differing
conditions. However, the same investment decision occasionally may be made for
two or more of such accounts including the Fund. In such cases, simultaneous
transactions may occur. Purchases or sales are then allocated as to price or
amount in a manner deemed fair and equitable to all accounts involved. While in
some cases this practice could have a detrimental effect upon the price or value
of the security as far as the Fund is concerned, in other cases G.T. Capital
believes that coordination and the ability to participate in volume transactions
will be beneficial to the Fund.
Under a policy adopted by the Company's Board of Directors, and subject to the
policy of obtaining the best net results, G.T. Capital may consider a
broker/dealer's sale of the shares of the Fund and the other funds for which
G.T. Capital serves as investment manager in selecting brokers and dealers for
the execution of portfolio transactions. This policy does not imply a commitment
to execute portfolio transactions through all broker/dealers that sell shares of
the Fund and such other funds.
The Fund contemplates purchasing most foreign equity securities in
over-the-counter markets or stock exchanges located in the countries in which
the respective principal offices of the issuers of the various securities are
located, if that is the best available market. The fixed commissions paid in
connection with most such foreign stock transactions generally are higher than
negotiated commissions on United States transactions. There generally is less
government supervision and regulation of foreign stock exchanges and
broker/dealers than in the United States. Foreign security settlements may in
some instances be subject to delays and related administrative uncertainties.
Statement of Additional Information Page 18
<PAGE>
G.T. GLOBAL EMERGING MARKETS FUND
Foreign equity securities may be held by the Fund in the form of ADRs, ADSs,
EDRs, CDRs or securities convertible into foreign equity securities. ADRs, ADSs,
EDRs and CDRs may be listed on stock exchanges, or traded in the over-the-
counter markets in the United States or Europe, as the case may be. ADRs, like
other securities traded in the United States, will be subject to negotiated
commission rates. The foreign and domestic debt securities and money market
instruments in which the Fund may invest are generally traded in the
over-the-counter markets.
The Fund contemplates that, consistent with the policy of obtaining the best net
results, brokerage transactions may be conducted through certain companies that
are members of the BIL GT Group. The Company's Board of Directors has adopted
procedures in conformity with Rule 17e-1 under the 1940 Act to ensure that all
brokerage commissions paid to affiliates are reasonable and fair in the context
of the market in which they are operating. Any such transactions will be
effected and related compensation paid only in accordance with applicable SEC
regulations. For the fiscal period May 18, 1992 (commencement of operations)
through October 31, 1992, and for the fiscal years ended October 31, 1993 and
1994, the Fund paid aggregate brokerage commissions of $942,553, 2,361,620 and
$1,747,307, respectively.
PORTFOLIO TRADING AND TURNOVER
The Fund engages in portfolio trading when G.T. Capital has concluded that the
sale of a security owned by the Fund and/ or the purchase of another security of
better value can enhance principal and/or increase income. A security may be
sold to avoid any prospective decline in market value, or a security may be
purchased in anticipation of a market rise. Consistent with the Fund's
investment objective, a security also may be sold and a comparable security
purchased coincidentally in order to take advantage of what is believed to be a
disparity in the normal yield and price relationship between the two securities.
Although the Fund generally does not intend to trade for short-term profits, the
securities in the Fund's portfolio will be sold whenever G.T. Capital believes
it is appropriate to do so, without regard to the length of time a particular
security may have been held. The Fund anticipates that its annual portfolio
turnover rate should not exceed 100%; however, the portfolio turnover rate will
not be a limiting factor when management deems portfolio changes appropriate. A
100% portfolio turnover rate would occur if the lesser of the value of purchases
or sales of portfolio securities for the Fund for a year (excluding purchases of
U.S. Treasury and other securities with a maturity at the date of purchase of
one year or less) were equal to 100% of the average monthly value of the
securities, excluding short-term investments, held by the Fund during such year.
Higher portfolio turnover involves correspondingly greater brokerage commissions
and other transaction costs that the Fund will bear directly. For the fiscal
years ended October 31, 1994 and 1993, the Fund's portfolio turnover rates were
100% and 99%, respectively.
Statement of Additional Information Page 19
<PAGE>
G.T. GLOBAL EMERGING MARKETS FUND
DIRECTORS AND EXECUTIVE
OFFICERS
- --------------------------------------------------------------------------------
The Company's Bylaws authorize a Board of Directors of between 1 and 25 persons,
as fixed by the Board of Directors. Directors normally are elected by
shareholders; however, a majority of remaining Directors may fill Director
vacancies caused by resignation, death or expansion of the Board. The Company's
Directors and Executive Officers are listed below.
<TABLE>
<CAPTION>
NAME, POSITION(S) WITH THE PRINCIPAL OCCUPATIONS AND BUSINESS
COMPANY AND ADDRESS EXPERIENCE FOR PAST 5 YEARS
- --------------------------------------- ------------------------------------------------------------------------------------------
<S> <C>
David A. Minella*, 42 Director of BIL GT Group Limited (holding company of the various international G.T.
Director, Chairman of the Board and companies) since 1990; Director and President of G.T. Capital since 1989; Director and
President President of G.T. Global since 1987; and Director and President of G.T. Services since
50 California Street 1990. Mr. Minella also is a director or trustee of each of the other investment companies
San Francisco, CA 94111 registered under the 1940 Act that is managed or administered by G.T. Capital.
C. Derek Anderson, 53 Chairman, Anderson Capital Management, Inc. from 1988 to present; Chairman, Plantagenet
Director Holdings, Ltd. from 1991 to present; Director, Munsingwear, Inc.; Director, American
220 Sansome Street Heritage Group, Inc. Director, T.L. Higgins Inc. and various other companies. Mr. Anderson
Suite 400 also is a director or trustee of each of the other investment companies registered under
San Francisco, CA 94104 the 1940 Act that is managed or administered by G.T. Capital.
Frank S. Bayley, 55 A Partner of Baker & McKenzie (a law firm) and serves as Director and Chairman of C.D.
Director Stimson and Company (a private investment company); Trustee, Seattle Art Museum. Mr.
2 Embarcadero Center Bayley also is a director or trustee of each of the other investment companies registered
Suite 2400 under the 1940 Act that is managed or administered by G.T. Capital.
San Francisco, CA 94111
Arthur C. Patterson, 52 Managing Partner of Accel Partners (a venture capital firm). Mr. Patterson also serves as
Director a director of various computing and software companies. Mr. Patterson also is a director
One Embarcadero Center or trustee of each of the other investment companies registered under the 1940 Act that is
Suite 3820 managed or administered by G.T. Capital.
San Francisco, CA 94111
Ruth H. Quigley, 59 Private investor. From 1984 to 1986, Miss Quigley was President of Quigley Friedlander &
Director Co., Inc. (a financial advisory services firm). Ms. Quigley also is a director or trustee
1055 California Street of each of the other investment companies registered under the 1940 Act that is managed or
San Francisco, CA 94108 administered by G.T. Capital.
F. Christian Wignall, 39 Senior Vice President, Chief Investment Officer - Global Equities and a Director of G.T.
Vice President and Chief Investment Capital since 1987, and Chairman of the Investment Policy Committee of the affiliated
Officer - international G.T. companies since 1990.
Global Equities
50 California Street
San Francisco, CA 94111
Gary Kreps, 40 Senior Vice President and Chief Investment Officer - Global Fixed Income of G.T. Capital
Vice President and Chief Investment and a Director since 1992. Prior to joining G.T. Capital, Mr. Kreps was Senior Vice
Officer - President of the Putnam Companies from 1988 to 1992.
Global Fixed Income
50 California Street
San Francisco, CA 94111
</TABLE>
Statement of Additional Information Page 20
<PAGE>
G.T. GLOBAL EMERGING MARKETS FUND
<TABLE>
<CAPTION>
NAME, POSITION(S) WITH THE PRINCIPAL OCCUPATIONS AND BUSINESS
COMPANY AND ADDRESS EXPERIENCE FOR PAST 5 YEARS
- --------------------------------------- ------------------------------------------------------------------------------------------
Helge K. Lee, 48 Senior Vice President, General Counsel and Secretary of G.T. Capital, G.T. Global and G.T.
Vice President and Secretary Services since May, 1994. Mr. Lee was the Senior Vice President, General Counsel and
50 California Street Secretary of Strong/Corneliuson Management, Inc. and Secretary of each of the Strong Funds
San Francisco, CA 94111 from October, 1991 through May, 1994. For more than five years prior to October, 1991, he
was a shareholder in the law firm of Godfrey & Kahn, S.C., Milwaukee, Wisconsin.
<S> <C>
James R. Tufts, 37 Senior Vice President - Finance and Administration of G.T. Capital, G.T. Global and G.T.
Vice President and Services since 1994. Prior thereto, Mr. Tufts was Vice President - Finance of G.T. Capital
Chief Financial Officer and G.T. Global since 1987; Vice President - Finance of G.T. Services since 1990; and a
50 California Street Director of G.T. Capital, G.T. Global and G.T. Services since 1991.
San Francisco, CA 94111
Kenneth W. Chancey, 50 Vice President of G.T. Capital and G.T. Global since 1992. Mr. Chancey was Vice President
Vice President and Chief of Putnam Fiduciary Trust Company from 1989 to 1992.
Accounting Officer
50 California Street
San Francisco, CA 94111
Peter R. Guarino, 36 Assistant General Counsel of G.T. Capital, G.T. Global and G.T. Services since 1991. From
Assistant Secretary 1989 to 1991, Mr. Guarino was an attorney at The Dreyfus Corporation. Prior thereto, he
50 California Street was associated with Colonial Management Associates, Inc.
San Francisco, CA 94111
David J. Thelander, 39 Assistant General Counsel of G.T. Capital since January 1995. From 1993 to 1994, Mr.
Assistant Secretary Thelander was an associate at Kirkpatrick & Lockhart LLP (a law firm). Prior thereto, he
50 California Street was an attorney with the U.S. Securities and Exchange Commission.
San Francisco, CA 94111
<FN>
- ------------------
* Mr. Minella is an "interested person" of the Company as defined by the 1940
Act due to his affiliation with the G.T. companies.
</TABLE>
The Board of Directors has a Nominating and Audit Committee, comprised of Miss
Quigley and Messrs. Anderson, Bayley and Patterson, which is responsible for
nominating persons to serve as Directors, reviewing audits of the Company and
its funds and recommending firms to serve as independent auditors of the
Company. Each of the Directors and officers of the Company is also a Director
and officer of G.T. Investment Portfolios, Inc., G.T. Global Developing Markets
Fund, Inc., a Trustee and officer of G.T. Global Growth Series and a Trustee and
officer of G.T. Greater Europe Fund, Global High Income Portfolio, G.T. Global
Variable Investment Trust, G.T. Global Variable Investment Series and Global
Investment Portfolio, which also are registered investment companies managed by
G.T. Capital. Each Director and officer serves in total as a Director and or
Trustee and officer, respectively, of 9 registered investment companies with 38
series managed or administered by G.T. Capital. The Company pays each Director
who is not a director, officer or employee of G.T. Capital or any affiliated
company $5,000 per annum, plus $300 per Fund for each meeting of the Board
attended, and reimburses travel and other expenses incurred in connection with
attendance at such meetings. Other Directors and officers receive no
compensation or expense reimbursement from the Company. For fiscal year ended
December 31, 1994, the Company paid Mr. Anderson, Mr. Bayley, Mr. Patterson and
Ms. Quigley received Directors' fees and expense reimbursements of $37,114,
$39,425, $31,941, and $33,178, respectively. For the year ended October 31, 1994
Mr. Anderson, Mr. Bayley, Mr. Patterson and Ms. Quigley who are not directors,
officers, or employees of G.T. Capital or any affiliated company, received total
compensation of $86,260.80, $91,278.72, $74,492.00 and $78,665.19, respectively,
from the 38 G.T. Funds for which he or she serves as a Director or Trustee. Fees
and expenses disbursed to the Directors contained no accrued or payable pension
or retirement benefits. As of the date of Additional Information, the officers
and Directors and their families as a group owned in the aggregate beneficially
or of record less than 1% of the outstanding shares of the Fund or of all the
Company's funds in the aggregate.
Statement of Additional Information Page 21
<PAGE>
G.T. GLOBAL EMERGING MARKETS FUND
MANAGEMENT
- --------------------------------------------------------------------------------
INVESTMENT MANAGEMENT AND ADMINISTRATION SERVICES
G.T. Capital serves as the Fund's investment manager and administrator under an
Investment Management and Administration Contract ("Management Contract")
between the Company and G.T. Capital. As investment manager and administrator,
G.T. Capital makes all investment decisions for the Fund and administers the
Fund's affairs. Among other things, G.T. Capital furnishes the services and pays
the compensation and travel expenses of persons who perform the executive,
administrative, clerical and bookkeeping functions of the Company and the Fund,
and provides suitable office space, necessary small office equipment and
utilities. For these services, the Fund pays G.T. Capital investment management
and administration fees, based on the Fund's average daily net assets, computed
daily and paid monthly at the annualized rate of .975% on the first $500
million, .95% on the next $500 million, .925% on the next $500 million and .90%
on amounts thereafter.
The Management Contract, has an initial two-year term with respect to the Fund
from the date of the commencement of Fund operations, and may be renewed for
additional one-year terms thereafter with respect to the Fund, provided that any
such renewal has been specifically approved at least annually by: (i) the
Company's Board of Directors, or by the vote of a majority of the Fund's
outstanding voting securities (as defined in the 1940 Act), and (ii) a majority
of Directors who are not parties to the Management Contract or "interested
persons" of any such party (as defined in the 1940 Act), cast in person at a
meeting called for the specific purpose of voting on such approval. The
Management Contract was approved with respect to the Fund by the vote of the
Board of Directors of the Company on June 15, 1994. The Management Contract
provides that with respect to the Fund either the Company or G.T. Capital may
terminate the Contract without penalty upon sixty (60) days' written notice to
the other party. The Management Contract terminates automatically in the event
of its assignment (as defined in the 1940 Act).
Under the Management Contract, G.T. Capital has agreed to reimburse the Fund if
the Fund's annual ordinary expenses exceed the most stringent expense
limitations prescribed by any state in which the Fund's shares are offered for
sale. Currently, the most restrictive applicable limitation provides that the
Fund's expenses may not exceed an annual rate of 2 1/2% of the first $30 million
of average net assets, 2% of the next $70 million of average net assets and
1 1/2% of assets in excess of that amount. Expenses which are not subject to
this limitation are interest, taxes, the amortization of organizational
expenses, payments of distribution fees, in part, certain expenses attributable
to investing outside the U.S. and extraordinary expenses. G.T. Capital and G.T.
Global have undertaken to limit the Fund's Advisor Class share expenses
(exclusive of brokerage commissions, taxes, interest, and extraordinary items)
to the maximum annual level of 1.90% of the average daily net assets of the
Advisor Class shares of the Fund. For the fiscal period May 18, 1992
(commencement of operations) through October 31, 1992, and for the fiscal years
ended October 31, 1993 and 1994, the Fund paid investment management and
administration fees to G.T. Capital in the amounts of $314,356, $1,161,673 and
$4,702,869, respectively.
Certain emerging market countries require a local entity to provide
administrative services for all direct investments by foreigners. Where required
by local law, the Fund intends to retain a local entity to provide such
administrative services. The local administrator will be paid a fee by the Fund
for its services.
DISTRIBUTION SERVICES
The Fund's Advisor Class shares are offered through the Fund's principal
underwriter and distributor, G.T. Global, on a "best efforts" basis without a
sales charge or a contingent deferred sales charge.
TRANSFER AGENCY SERVICES
G.T. Global Investor Services, Inc. ("Transfer Agent") has been retained by the
Fund to perform shareholder servicing, reporting and general transfer agent
functions for the Fund. For these services, the Transfer Agent receives an
annual maintenance fee of $17.50 per account, a new account fee of $4.00 per
account, a per transaction fee of $1.75 for all transactions other than
exchanges and a per exchange fee of $2.25. The Transfer Agent also is reimbursed
by the Fund for its out-of-pocket expenses for such items as postage, forms,
telephone charges, stationery and office supplies.
Statement of Additional Information Page 22
<PAGE>
G.T. GLOBAL EMERGING MARKETS FUND
EXPENSES OF THE FUND
As described in the Prospectus, the Fund pays all of its own expenses not
assumed by other parties. The allocation of general Company expenses and
expenses shared among the Fund and other funds organized as series of the
Company are allocated on a basis deemed fair and equitable, which may be based
on the relative net assets of the Fund or the nature of the services performed
and relative applicability to the Fund. Expenditures, including costs incurred
in connection with the purchase or sale of portfolio securities, which are
capitalized in accordance with generally accepted accounting principles
applicable to investment companies, are accounted for as capital items and not
as expenses. The ratio of the Fund's expenses to its relative net assets can be
expected to be higher than the expense ratios of funds investing solely in
domestic securities, since the cost of maintaining the custody of foreign
securities and the rate of investment management fees paid by the Fund generally
are higher than the comparable expenses of such other funds. For the fiscal
period May 18, 1992 (commencement of operations) through October 31, 1992, G.T.
Capital reimbursed the Fund for a portion of the Fund's aggregate operating
expenses in the amount of $167,334. For the fiscal year ended October 31, 1993,
G.T. Capital reimbursed the Fund for a the Class A and Class B aggregate
operating expenses in the amounts of $565,445 and $43,668, respectively.
- --------------------------------------------------------------------------------
VALUATION OF FUND SHARES
- --------------------------------------------------------------------------------
As described in the Prospectus, the Fund's net asset value per share for each
class of shares is determined at the end of regular trading on The New York
Stock Exchange, Inc. ("NYSE") (currently at 4:00 p.m. Eastern time, unless
weather, equipment failure or other factors contribute to an earlier closing
time), on each Business Day as open for business. Currently, the NYSE is closed
on weekends and on certain days relating to the following holidays: New Year's
Day, Presidents' Day, Good Friday, Memorial Day, July 4th, Labor Day,
Thanksgiving Day and Christmas Day.
The Funds' portfolio securities and other assets are valued as follows:
Equity securities, including ADRs, ADSs, CDRs and EDRs, which are traded on
stock exchanges, are valued at the last sale price on the exchange, or in the
principal over-the-counter market on which such securities are traded, as of the
close of business on the day the securities are being valued or, lacking any
sales, at the last available bid price. In cases where securities are traded on
more than one exchange, the securities are valued on the exchange determined by
G.T. Capital to be the primary market. Securities and assets for which market
quotations are not readily available (including restricted securities which are
subject to limitations as to their sale) are valued at fair value as determined
in good faith by or under the direction of the Board of Directors. Trading in
securities on European and Far Eastern securities exchanges and over-the-counter
markets is normally completed well before the close of the business day in New
York.
Long-term debt obligations are valued at the mean of representative quoted bid
and asked prices for such securities or, if such prices are not available, at
prices for securities of comparable maturity, quality and type; however, when
G.T. Capital deems it appropriate, prices obtained for the day of valuation from
a bond pricing service will be used. Short-term investments are amortized to
maturity based on their cost, adjusted for foreign exchange translation,
provided such valuations represent fair value.
Options on indices, securities and currencies purchased by the Fund are valued
at their last bid price in the case of listed options or at the average of the
last bid prices obtained from dealers in the case of OTC options. The value of
each security denominated in a currency other than U.S. dollars will be
translated into U.S. dollars at the prevailing exchange rate as determined by
G.T. Capital on that day. When market quotations for futures and options on
futures held by the Fund are readily available, those positions will be valued
based upon such quotations.
Securities and other assets for which market quotations are not readily
available are valued at fair value as determined in good faith by or under the
direction of the Company's Board of Directors. The valuation procedures applied
in any specific instance are likely to vary from case to case. However,
consideration generally is given to the financial position of the issuer and
other fundamental analytical data relating to the investment and to the nature
of the restrictions on disposition of the securities (including any registration
expenses that might be borne by the Fund in connection with such disposition).
In addition, specific factors also generally are considered, such as the cost of
the investment, the market value of any unrestricted securities of the same
class (both at the time of purchase and at the time of valuation), the size of
the
Statement of Additional Information Page 23
<PAGE>
G.T. GLOBAL EMERGING MARKETS FUND
holding, the prices of any recent transactions or offers with respect to such
securities and any available analysts' reports regarding the issuer.
The fair value of any other assets is added to the value of all securities
positions to arrive at the value of the Fund's total assets. The Fund's
liabilities, including accruals for expenses, are deducted from its total
assets. Once the total value of the Fund's net assets is so determined, that
value is then divided by the total number of shares outstanding (excluding
treasury shares), and the result, rounded to the nearer cent, is the net asset
value per share.
Any assets or liabilities initially denominated in terms of foreign currencies
are translated into U.S. dollars at the official exchange rate or at the mean of
the current bid and asked prices of such currencies against the U.S. dollar last
quoted by a major bank that is a regular participant in the foreign exchange
market or on the basis of a pricing service that takes into account the quotes
provided by a number of such major banks. If none of these alternatives are
available or none are deemed to provide a suitable methodology for converting a
foreign currency into U.S. dollars, the Board of Directors in good faith will
establish a conversion rate for such currency.
Securities trading in emerging markets may not take place on all days on which
the NYSE is open. Further, trading takes place in Japanese markets on certain
Saturdays and in various foreign markets on days on which the NYSE is not open.
Consequently, the calculation of the Fund's net asset values therefore may not
take place contemporaneously with the determination of the prices of securities
held by the Fund. Events affecting the values of portfolio securities that occur
between the time their prices are determined and the close of regular trading on
the NYSE will not be reflected in the Fund's net asset value unless G.T.
Capital, under the supervision of the Company's Board of Directors, determines
that the particular event would materially affect net asset value. As a result,
the Fund's net asset value may be significantly affected by such trading on days
when a shareholder cannot provide or redeem the Fund.
- --------------------------------------------------------------------------------
INFORMATION RELATING TO SALES
AND REDEMPTIONS
- --------------------------------------------------------------------------------
PAYMENT AND TERMS OF OFFERING
Payment of Advisor Class shares purchased should accompany the purchase order,
or funds should be wired to the Transfer Agent as described in the Prospectus.
Payment, other than by wire transfer, must be made by check or money order drawn
on a U.S. bank. Checks or money orders must be payable in U.S. dollars.
As a condition of this offering, if an order to purchase either class of shares
is cancelled due to nonpayment (for example, because a check is returned for
"not sufficient funds"), the person who made the order will be responsible for
any loss incurred by the Fund by reason of such cancellation, and if such
purchaser is a shareholder, the Fund shall have the authority as agent of the
shareholder to redeem shares in his or her account at their then-current net
asset value per share to reimburse the Fund for the loss incurred. Investors
whose purchase orders have been cancelled due to nonpayment may be prohibited
from placing future orders.
The Fund reserves the right at any time to waive or increase the minimum
requirements applicable to initial or subsequent investments with respect to any
person or class of persons. An order to purchase shares is not binding on the
Fund until it has been confirmed in writing by the Transfer Agent (or other
arrangements made with the Fund, in the case of orders utilizing wire transfer
of funds, as described above) and payment has been received. To protect existing
shareholders, the Fund reserves the right to reject any offer for a purchase of
shares by any individual.
SALES OUTSIDE THE UNITED STATES
Sales of Fund shares made through brokers outside the United States will be at
net asset value plus a sales commission, if any, established by that broker or
by local law; such a commission, if any, may be more or less than the sales
charges listed in the sales charge table included in the Prospectus.
EXCHANGES BETWEEN FUNDS
Shares of the Fund may be exchanged for shares of other G.T. Global Mutual
Funds, based on their respective net asset values without imposition of any
sales charges provided that the registration remains identical. Advisor Class
shares may be exchanged only for Advisor Class shares of other G.T. Global
Mutual Funds. The exchange privilege is not an option or right to purchase
shares but is permitted under the current policies of the respective G.T. Global
Mutual Funds. The
Statement of Additional Information Page 24
<PAGE>
G.T. GLOBAL EMERGING MARKETS FUND
privilege may be discontinued or changed at any time by any of the funds upon 60
days prior notice to the shareholders of such fund and is available only in
states where the exchange may be legally made. Before purchasing shares through
the exercise of the exchange privilege, a shareholder should obtain and read a
copy of the prospectus of the fund to be purchased and should consider the
investment objective(s) of the fund.
TELEPHONE REDEMPTIONS
A corporation or partnership wishing to utilize telephone redemption services
must submit a "Corporate Resolution" or "Certificate of Partnership" indicating
the names, titles and the required number of signatures of persons authorized to
act on its behalf. The certificate must be signed by a duly authorized
officer(s), and, in the case of a corporation, the corporate seal must be
affixed. All shareholders may request that redemption proceeds be transmitted by
bank wire upon request directly to the shareholder's predesignated account at a
domestic bank or savings institution if the proceeds are at least $1,000. Costs
in connection with the administration of this service, including wire charges,
currently are borne by the Fund. Proceeds of less than $1,000 will be mailed to
the shareholder's registered address of record. The Fund and the Transfer Agent
reserve the right to refuse any telephone instructions and may discontinue the
aforementioned redemption options upon 30 days' written notice.
SUSPENSION OF REDEMPTION PRIVILEGES
The Fund may suspend redemption privileges or postpone the date of payment for
more than seven days after a redemption order is received during any period (1)
when the NYSE is closed other than customary weekend and holiday closings, or
trading on the NYSE is restricted as directed by the SEC, (2) when an emergency
exists, as defined by the SEC, which will prohibit the Fund from disposing of
its portfolio securities or in fairly determining the value of its assets, or
(3) as the SEC may otherwise permit.
REDEMPTIONS IN KIND
It is possible that conditions may arise in the future which would, in the
opinion of the Company's Board of Directors, make it undesirable for the Fund to
pay for all redemptions in cash. In such cases, the Board may authorize payment
to be made in portfolio securities or other property of the Fund, so called
"redemptions in kind." Payment of redemptions in kind will be made in readily
marketable securities. Such securities would be valued at the same value
assigned to them in computing the net asset value per share. Shareholders
receiving such securities would incur brokerage costs in selling any such
securities so received. However, despite the foregoing, the Company has filed
with the SEC an election pursuant to Rule 18f-1 under the 1940 Act. This means
that the Fund will pay in cash all requests for redemption made by any
shareholder of record, limited in amount with respect to each shareholder during
any ninety-day period to the lesser of $250,000 or 1% of the value of the Fund's
net assets at the beginning of such period. This election is irrevocable so long
as Rule 18f-1 remains in effect, unless the SEC by order upon application
permits the withdrawal of such election.
- --------------------------------------------------------------------------------
TAXES
- --------------------------------------------------------------------------------
GENERAL
In order to continue to qualify for treatment as a regulated investment company
("RIC") under the Internal Revenue Code of 1986, as amended ("Code"), the Fund
must distribute to its shareholders for each taxable year at least 90% of its
investment company taxable income (consisting generally of net investment
income, net short-term capital gain and net gains from certain foreign currency
transactions) ("Distribution Requirement") and must meet several additional
requirements. These requirements include the following: (1) the Fund must derive
at least 90% of its gross income each taxable year from dividends, interest,
payments with respect to securities loans and gains from the sale or other
disposition of securities or foreign currencies, or other income (including
gains from options, Futures or Forward Contracts) derived with respect to its
business of investing in securities or those currencies ("Income Requirement");
(2) the Fund must derive less than 30% of its gross income each taxable year
from the sale or other disposition of securities, or any of the following, that
were held for less than three months -- options or Futures (other than those on
foreign currencies), or foreign currencies (or options, Futures or Forward
Contracts thereon) that are not directly related to the Fund's principal
business of investing in securities (or options and Futures with respect to
securities) ("Short-Short Limitation"); (3) at the close of each quarter of the
Fund's taxable year, at least 50% of the value of its total assets must be
represented by cash and cash items, U.S. government securities, securities of
other RICs, and other securities, with these other securities limited, in
Statement of Additional Information Page 25
<PAGE>
G.T. GLOBAL EMERGING MARKETS FUND
respect of any one issuer, to an amount that does not exceed 5% of the value of
the Fund's total assets and that does not represent more than 10% of the
issuer's outstanding voting securities; and (4) at the close of each quarter of
the Fund's taxable year, not more than 25% of the value of its total assets may
be invested in securities (other than U.S. government securities or the
securities of other RICs) of any one issuer.
Dividends and other distributions declared by the Fund in, and payable to
shareholders of record as of a date in, October, November or December of any
year will be deemed to have been paid by the Fund and received by the
shareholders on December 31 of that year if the distributions are paid by the
Fund during the following January. Accordingly, those distributions will be
taxed to shareholders for the year in which that December 31 falls.
A portion of the dividends from the Fund's investment company taxable income
(whether paid in cash or reinvested in additional shares) may be eligible for
the dividends-received deduction allowed to corporations. The eligible portion
may not exceed the aggregate dividends received by the Fund from U.S.
corporations. However, dividends received by a corporate shareholder and
deducted by it pursuant to the dividends-received deduction are subject
indirectly to the alternative minimum tax.
If Fund shares are sold at a loss after being held for six months or less, the
loss will be treated as long-term, instead of short-term, capital loss to the
extent of any capital gain distributions received on those shares. Investors
also should be aware that if shares are purchased shortly before the record date
for any dividend or other distribution, the shareholder will pay full price for
the shares and receive some portion of the price back as a taxable distribution.
The Fund will be subject to a nondeductible 4% excise tax ("Excise Tax") to the
extent it fails to distribute by the end of any calendar year substantially all
of its ordinary income for that year and capital gain net income for the
one-year period ending on October 31 of that year, plus certain other amounts.
FOREIGN TAXES
Dividends and interest received by the Fund may be subject to income,
withholding or other taxes imposed by foreign countries and U.S. possessions
that would reduce the yield on its securities. Tax conventions between certain
countries and the United States may reduce or eliminate these foreign taxes,
however, and many foreign countries do not impose taxes on capital gains in
respect of investments by foreign investors. If more than 50% of the value of
the Fund's total assets at the close of its taxable year consists of securities
of foreign corporations, the Fund will be eligible to, and may, file an election
with the Internal Revenue Service that will enable its shareholders, in effect,
to receive the benefit of the foreign tax credit with respect to any foreign
income taxes paid by it. Pursuant to the election, the Fund will treat those
taxes as dividends paid to its shareholders and each shareholder will be
required to (1) include in gross income, and treat as paid by him, his
proportionate share of those taxes, (2) treat his share of those taxes and of
any dividend paid by the Fund that represents income from foreign sources as his
own income from those sources, and (3) either deduct the taxes deemed paid by
him in computing his taxable income or, alternatively, use the foregoing
information in calculating the foreign tax credit against his federal income
tax. The Fund will report to its shareholders shortly after each taxable year
their respective shares of the Fund's income from sources within, and taxes paid
to, foreign countries if it makes this election.
PASSIVE FOREIGN INVESTMENT COMPANIES
The Fund may invest in the stock of "passive foreign investment companies"
("PFICs"). A PFIC is a foreign corporation that, in general, meets either of the
following tests: (1) at least 75% of its gross income is passive or (2) an
average of at least 50% of its assets produce, or are held for the production
of, passive income. Under certain circumstances, the Fund would be subject to
federal income tax on a portion of any "excess distribution" received, on the
stock or of any gain from disposition of, stock of a PFIC (collectively "PFIC
income"), plus interest thereon, even if the Fund distributed the PFIC income as
a taxable dividend to its shareholders. The balance of the PFIC income would be
included in the Fund's investment company taxable income and, accordingly, would
not be taxable to the Fund to the extent that income is distributed to its
shareholders.
If the Fund does invest in a PFIC and elects to treat the PFIC as a "qualified
electing fund" ("QEF"), then in lieu of the foregoing tax and interest
obligation, the Fund would be required to include in income each taxable year
its pro rata share of the QEF's ordinary earnings and net capital gain (the
excess of net long-term capital gain over net short-term capital loss) -- which
most likely would have to be distributed to satisfy the Distribution Requirement
and to avoid imposition of the Excise Tax -- even if those earnings and gain
were not received by the Fund. In most instances it will be very difficult, if
not impossible, to make this election because of certain requirements thereof.
The "Tax Simplificiation and Technical Corrections Bill of 1993," passed in May
1994 by the House of Representatives would substantially modify the taxation of
U.S. shareholders of foreign corporations, including eliminating the provisions
described above dealing with PFICs and replacing them (and other provisions)
with a regulatory scheme involving entities
Statement of Additional Information Page 26
<PAGE>
G.T. GLOBAL EMERGING MARKETS FUND
called "passive foreign corporations." Three similar bills were passed by
Congress in 1991 and 1992 and vetoed. It is unclear at this time whether, and in
what form, the proposed modifications may be enacted into law.
Pursuant to proposed regulations, open-end RICs, such as the Fund, would be
entitled to elect to "mark-to-market" their stock in certain PFICs.
"Marking-to-market," in this context, means recognizing as gain for each taxable
year the excess, as of the end of that year, of the fair market value of each
such PFIC's stock over the adjusted basis in that stock (including
mark-to-market gain for each prior year for which an election was in effect).
NON-U.S. SHAREHOLDERS
Dividends paid by the Fund to a shareholder who, as to the United States, is a
nonresident alien individual, nonresident alien fiduciary of a trust or estate,
foreign corporation or foreign partnership ("foreign shareholder") will be
subject to U.S. withholding tax (at a rate of 30% or lower treaty rate).
Withholding will not apply if a dividend paid by the Fund to a foreign
shareholder is "effectively connected with the conduct of a U.S. trade or
business," in which case the reporting and withholding requirements applicable
to shareholders will apply. Distributions of net capital gain are not subject to
withholding, but in the case of a foreign shareholder who is a nonresident alien
individual, those distributions ordinarily will be subject to U.S. income tax at
a rate of 30% (or lower treaty rate) if the individual is physically present in
the United States for more than 182 days during the taxable year and the
distributions are attributable to a fixed place of business maintained by the
individual in the United States.
OPTIONS, FUTURES AND FOREIGN CURRENCY TRANSACTIONS
The use of hedging transactions, such as selling (writing) and purchasing
options and Futures Contracts and entering into Forward Contracts, involves
complex rules that will determine, for federal income tax purposes, the
character and timing of recognition of the gains and losses the Fund realizes in
connection therewith. Income from foreign currencies (except certain gains
therefrom that may be excluded by future regulations), and income from
transactions in options, Futures and Forward Contracts derived by the Fund with
respect to its business of investing in securities or foreign currencies, will
qualify as permissible income under the Income Requirement. However, income from
the disposition by the Fund of options and Futures (other than those on foreign
currencies) will be subject to the Short-Short Limitation if they are held for
less than three months. Income from the disposition by the Fund of foreign
currencies, and options, Futures and Forward Contracts on foreign currencies,
that are not directly related to the Fund's principal business of investing in
securities (or options and futures with respect thereto) also will be subject to
the Short-Short Limitation if they are held for less than three months.
If the Fund satisfies certain requirements, any increase in value of a position
that is part of a "designated hedge" will be offset by any decrease in value
(whether realized or not) of the offsetting hedging position during the period
of the hedge for purposes of determining whether the Fund satisfies the
Short-Short Limitation. Thus, only the net gain (if any) from the designated
hedge will be included in gross income for purposes of that limitation. The Fund
intends that, when it engages in hedging transactions, it will qualify for this
treatment, but at the present time it is not clear whether this treatment will
be available for all of those transactions. To the extent this treatment is not
available, the Fund may be forced to defer the closing out of certain options,
Futures, Forward Contracts or foreign currency positions beyond the time when it
otherwise would be advantageous to do so, in order for the Fund to continue to
qualify as a RIC.
Futures and Forward Contracts that are subject to section 1256 of the Code
(other than those that are part of a "mixed straddle") ("Section 1256
Contracts") and that are held by the Fund at the end of its taxable year
generally will be deemed to have been sold at market value for federal income
tax purposes. Sixty percent of any net gain or loss recognized on these deemed
sales, and 60% of any net gain or loss realized from any actual sales of Section
1256 Contracts, will be treated as long-term capital gain or loss, and the
balance will be treated as short-term capital gain or loss. Section 988 of the
Code also may apply to gains and losses from transactions in foreign currencies,
foreign currency-denominated debt securities and options, Futures and Forward
Contracts and options on foreign currencies. Each section 988 gain or loss
generally is computed separately and treated as ordinary income or loss. In the
case of overlap between sections 1256 and 988, special provisions determine the
character and timing of any income, gain or loss. The Fund attempts to monitor
section 988 transactions to minimize any adverse tax impact.
The foregoing is a general and abbreviated summary of certain federal income tax
considerations affecting the Fund and its shareholders. Investors are urged to
consult their own tax advisers for more detailed information and for information
regarding any foreign, state and local taxes applicable to distributions
received from the Fund.
Statement of Additional Information Page 27
<PAGE>
G.T. GLOBAL EMERGING MARKETS FUND
ADDITIONAL INFORMATION
- --------------------------------------------------------------------------------
BIL GT GROUP
Other subsidiaries of the BIL GT Group include the Bank in Liechtenstein AG, an
international financial services institution founded in 1920, with over $17
billion in assets under administration and principal offices in Vaduz,
Liechtenstein, Bank in Liechtenstein (Frankfurt) GmbH, and Bilfinanz und
Verwaltung AG located in Zurich, Switzerland. In total, BIL GT Group encompasses
over $43 billion in assets under management and administration.
CUSTODIAN
State Street Bank and Trust Company ("State Street"), 225 Franklin Street,
Boston, Massachusetts 02110, acts as custodian of the Fund's assets. State
Street is authorized to establish and has established separate accounts in
foreign currencies and to cause securities of the Fund to be held in separate
accounts outside the United States in the custody of non-U.S. banks.
INDEPENDENT ACCOUNTANTS
The Funds' independent accountants are Coopers & Lybrand L.L.P., One Post Office
Square, Boston, Massachusetts 02109. Coopers & Lybrand L.L.P. will conduct an
annual audit of the Fund, assist in the preparation of the Fund's federal and
state income tax returns and consult with the Company and the Fund as to matters
of accounting, regulatory filings, and federal and state income taxation.
The audited financial statements of the Company included in this Statement of
Additional Information have been examined by Coopers & Lybrand L.L.P., as stated
in their opinion appearing herein and are included in reliance upon such opinion
given upon the authority of said firm as experts in accounting and auditing.
USE OF NAME
G.T. Capital has granted the Company the right to use the "G.T." name and has
reserved the right to withdraw its consent to the use of such name by the
Company and/or the Fund at any time, or to grant the use of such name to any
other company.
Statement of Additional Information Page 28
<PAGE>
G.T. GLOBAL EMERGING MARKETS FUND
INVESTMENT RESULTS
- --------------------------------------------------------------------------------
The Fund's "Standardized Return," as referred to in the Prospectus (see "Other
Information -- Performance Information in the Prospectus"), is calculated
separately for Class A and Class B shares of the Fund, as follows: Standardized
Return ("T") is computed by using the value at the end of the period ("EV") of a
hypothetical initial investment of $1,000 ("P") over a period of years ("n")
according to the following formula as required by the SEC: P(1+T) to the (n)th
power = EV. The following assumptions will be reflected in computations made in
accordance with this formula: (1) for Class A shares, deduction of the maximum
sales charge of 4.75% from the $1,000 initial investment; (2) for Class B
shares, deduction of the applicable contingent deferred sales charge imposed on
a redemption of Class B shares held for the period; (3) reinvestment of
dividends and other distributions at net asset value on the reinvestment date
determined by the Board; and (4) a complete redemption at the end of any period
illustrated.
The Fund's Standardized Returns for its Class A shares, stated as average
annualized total returns, at October 31, 1994, was as follows:
<TABLE>
<CAPTION>
PERIOD STANDARDIZED RETURN
- ---------------------------------------------------------------------------------------------------- ---------------------
<S> <C>
Year ended October 31, 1994......................................................................... 26.29%
May 18, 1992 through
October 31, 1994................................................................................... 21.26%
</TABLE>
The Fund's Standardized Returns for its Class B shares which were first offered
on April 1, 1993, stated as average annual total returns for the periods shown,
were:
<TABLE>
<CAPTION>
PERIOD STANDARDIZED RETURN
- ---------------------------------------------------------------------------------------------------- ---------------------
<S> <C>
Year ended October 31, 1994......................................................................... 26.77%
April 1, 1993 through October 31, 1994.............................................................. 35.32%
</TABLE>
"Non-Standardized Return," as referred to in the Prospectus, is calculated for a
specified period of time by assuming the investment of $1,000 in Fund shares and
further assuming the reinvestment of all dividends and other distributions made
to Fund shareholders in additional Fund shares at their net asset value.
Percentage rates of return are then calculated by comparing this assumed initial
investment to the value of the hypothetical account at the end of the period for
which the Non-Standardized Return is quoted. As discussed in the Prospectus, the
Fund may quote non-standardized total returns that do not reflect the effect of
sales charges. Non-Standardized Returns may be quoted from the same or different
time periods for which Standardized Returns are quoted. The Fund's
Non-Standardized Returns for its Class A shares, stated as aggregate total
returns, at October 31, 1994, were as follows:
<TABLE>
<CAPTION>
NON-STANDARDIZED
PERIOD AGGREGATE TOTAL RETURN
- -------------------------------------------------------------------------------------------------- -----------------------
<S> <C>
Year ended October 31, 1994....................................................................... 32.58%
May 18, 1992 through October 31, 1994............................................................. 68.52%
</TABLE>
The Fund's Non-Standardized Return for its Class B shares which were first
offered on April 1, 1993, stated as aggregate total returns, for the periods
shown, were as follows:
<TABLE>
<CAPTION>
PERIOD NON-STANDARDIZED RETURN
- ------------------------------------------------------------------------------------------------ -------------------------
<S> <C>
Year ended October 31, 1994..................................................................... 31.77%
April 1, 1993 through October 31, 1994.......................................................... 65.43%
</TABLE>
The Fund's Non-Standardized Returns for its Class A shares, stated as average
annualized total returns, at October 31, 1994, were as follows:
<TABLE>
<CAPTION>
NON-STANDARDIZED
AVERAGE ANNUALIZED
PERIOD TOTAL RETURN
- ----------------------------------------------------------------------------------------------------- ---------------------
<S> <C>
Year ended October 31, 1994.......................................................................... 32.58%
May 18, 1992 through October 31, 1994................................................................ 23.69%
</TABLE>
Statement of Additional Information Page 29
<PAGE>
G.T. GLOBAL EMERGING MARKETS FUND
The Fund's Non-Standardized Returns for its Class B shares, stated as average
annualized total returns, for the periods shown, were:
<TABLE>
<CAPTION>
NON-STANDARDIZED
AVERAGE ANNUALIZED
PERIOD TOTAL RETURN
- ----------------------------------------------------------------------------------------------------- ---------------------
<S> <C>
Year ended October 31, 1994.......................................................................... 31.77%
April 1, 1993 through October 31, 1993............................................................... 37.42%
</TABLE>
Standardized Returns and Non-Standardized Returns are not presented for the
Advisor Class shares because no shares of that class were outstanding during the
fiscal year ended October 31, 1994.
The Fund's investment results will vary from time to time depending upon market
conditions, the composition of the Fund's portfolio and operating expenses of
the Fund, so that current or past yield or total return should not be considered
representative of what an investment in the Fund may earn in any future period.
These factors and possible differences in the methods used in calculating
investment results should be considered when comparing the Fund's investment
results with those published for other investment companies and other investment
vehicles. The Fund's results also should be considered relative to the risks
associated with the Fund's investment objective and policies. The Fund will
include performance data for both classes of shares of the Fund in any
advertisement or information including performance data of the Fund.
From time to time, the Fund and G.T. Global may refer to the number of
shareholders in the Fund or the aggregate number of shareholders in all G.T.
Global Mutual Funds or the dollar amount of the Fund's assets under management
in advertising materials.
The Fund and G.T. Global may from time to time compare the Fund with the
following:
(1) The Salomon Brothers Non-U.S. Dollars Indices, which are measures of
the total return performance of high quality non-U.S. dollar denominated
securities in major sectors of the worldwide bond markets.
(2) The Shearson Lehman Government/Corporate Bond Index, which is a
comprehensive measure of all public obligations of the U.S. Treasury
(excluding flower bonds and foreign targeted issues), all publicly issued
debt of agencies of the U.S. Government (excluding mortgage backed
securities), and all public, fixed rate, non-convertible investment grade
domestic corporate debt rated at least Baa by Moody's Investors Service or
BBB by Standard and Poor's Corporation, or, in the case of nonrated bonds,
BBB by Fitch Investors Service (excluding Collateralized Mortgage
Obligations).
(3) Average of Savings Accounts, which is a measure of all kinds of
savings deposits, including longer-term certificates (based on figures
supplied by the U.S. League of Savings Institutions). Savings accounts offer
a guaranteed rate of return on principal, but no opportunity for capital
growth. During a portion of the period, the maximum rates paid on some
savings deposits were fixed by law.
(4) The Consumer Price Index, which is a measure of the average change
in prices over time in a fixed market basket of goods and services (e.g.,
food, clothing, shelter, fuels, transportation fares, charges for doctors'
and dentists' services, prescription medicines, and other goods and services
that people buy for day-to-day living).
(5) Data and mutual fund rankings published or prepared by Lipper
Analytical Data Services, Inc. ("Lipper"), CDA/Wiesenberger Investment
Company Service ("CDA/Wiesenberger"), Morningstar Inc." and/or other
companies that rank and/or compare mutual funds by overall performance,
investment objectives, assets, expense levels, periods of existence and/or
other factors. In this regard the Fund may be compared to the Fund's "peer
group" as defined by Lipper, CDA/Wiesenberger ("Morningstar") and/or other
firms as applicable, or to specific funds or groups of funds within or
without such peer group. Morningstar is a mutual fund rating service that
also rates mutual funds on the basis of risk-adjusted performance.
Morningstar ratings are calculated from a fund's three, five and ten year
average annual returns with appropriate fee adjustments and a risk factor
that reflects fund performance relative to the three-month U.S. Treasury
bill monthly returns. Ten percent of the funds in an investment category
receive five stars and 22.5% receive four stars. The ratings are subject to
change each month.
(6) Bear Stearns Foreign Bond Index, which provides simple average
returns for individual countries and GNP-weighted index, beginning in 1975.
The returns are broken down by local market and currency.
(7) Ibbottson Associates International Bond Index, which provides a
detailed breakdown of local market and currency returns since 1960.
Statement of Additional Information Page 30
<PAGE>
G.T. GLOBAL EMERGING MARKETS FUND
(8) Standard & Poor's "500" Index which is a widely recognized index
composed of the capitalization-weighted average of the price of 500 of the
largest publicly traded stocks in the U.S.
(9) Salomon Brothers Broad Investment Grade Index which is a widely used
index composed of U.S. domestic government, corporate and mortgage-back
fixed income securities.
(10) Dow Jones Industrial Average.
(11) CNBC/Financial News Composite Index.
(12) Morgan Stanley Capital International World Indices, including, among
others, the Morgan Stanley Capital International Europe, Australia, Far East
Index ("EAFE Index"). The EAFE index is an unmanaged index of more than 800
companies of Europe, Australia and the Far East.
(13) International Finance Corporation (IFC) Emerging Markets Data Base
which provides detailed statistics on stock markets in developing countries.
(14) Salomon Brothers World Government Bond Index and Salomon Brothers
World Government Bond Index-Non-U.S. are each a widely used index composed
of world government bonds.
(15) The World Bank Publication of Trends in Developing Countries (TIDE)
provides brief reports on most of the World Bank's borrowing members. The
World Development Report is published annually and looks at global and
regional economic trends and their implications for the developing
economies.
(16) Salomon Brothers Global Telecommunications Index is composed of
telecommunications companies in the developing and emerging countries.
(17) Datastream and Worldscope an on-line database retrieval service for
information including but not limited to international financial and
economic data.
(18) International Financial Statistics, which is produced by the
International Monetary Fund.
(19) Various publications and annual reports such as the World
Development Report, produced by the World Bank and its affiliates.
(20) Various publications from the International Bank for Reconstruction
and Development/The World Bank.
(21) Various publications including but not limited to ratings agencies
such as Moody's Investors Services, Fitch Investors Service, Standard &
Poor's Ratings Group.
(22) Wilshire Associates which is an on-line database for international
financial and economic data including performance measure for a wide range
of securities.
(23) Various publications from the Organization for Economic Cooperation
and Development (OECD).
Indices, economic and financial data prepared by the research departments of
such financial organizations as Salomon Brothers, Inc., Lehman Brothers, Merrill
Lynch, Pierce, Fenner & Smith, Inc. J. P. Morgan, Morgan Stanley, Smith Barney
Shearson, S.G. Warburg, Jardine Flemming, Barings Securities, The Bank for
International Settlements, Asian Development Bank, Bloomberg, L.P. and Ibbottson
Associates may be used as well as information reported by the Federal Reserve
and the respective Central Banks of various nations. In addition, performance
rankings, ratings and commentary reported periodically in national financial
publications, included but not limited to Money Magazine, Smart Money, Global
Finance, EuroMoney, Financial World, Forbes, Fortune, Business Week, Latin
Finance, the Wall Street Journal, Emerging Markets Weekly, Kiplinger's Guide To
Personal Finance, Barron's, The Financial Times, USA Today, The New York Times,
Far Eastern Economic Review, The Economist and Investors Business Digest. Each
Fund may compare its performance to that of other compilations or indices of
comparable quality to those listed above and other indices which may be
developed and made available.
G.T. Global believes the Fund is an appropriate investment for long-term
investment goals including but not limited to funding retirement, paying for
education or purchasing a house. The Fund does not represent a complete
investment program and investors should consider the Fund as appropriate for a
portion of their overall investment portfolio with regard to their long-term
investment goals.
G.T. Global believes that a growing number of consumer products, including but
not limited to home appliances, automobiles and clothing, purchased by Americans
are manufactured abroad. G.T. Global believes that investing globally in the
companies that produce products for U.S. consumers can help U.S. investors seek
protection of the value of their
Statement of Additional Information Page 31
<PAGE>
G.T. GLOBAL EMERGING MARKETS FUND
assets against the potentially increasing costs of foreign manufactured goods.
Of course, there can be no assurance that there will be any correlation between
global investing and the costs of such foreign goods unless there is a
corresponding change in value of the U.S. dollar to foreign currencies. From
time to time, G.T. Global may refer to or advertise the names of such companies
although there can be no assurance that any G.T. Global Mutual Fund may own the
securities of these companies.
From time to time, the Fund and G.T. Global may refer to the number of
shareholders in the Fund or the aggregate number of shareholders in all G.T.
Global Mutual Funds or the dollar amount of Fund assets under management in
advertising materials.
The Fund may compare its performance to that of other compilations or indices of
comparable quality to those listed above which may be developed and made
available in the future. The Fund may be compared in advertising to Certificates
of Deposit (CDs), the Bank Rate Monitor National Index, an average of the quoted
rates for 100 leading banks and thrifts in ten U.S. cities chosen to represent
the ten largest Consumer Metropolitan statistical areas, or other investments
issued by banks. The Fund differs from bank investments in several respects. The
Fund may offer greater liquidity or higher potential returns than CDs; but
unlike CDs, the Fund will have a fluctuating share price and return and is not
FDIC insured.
The Fund's performance may be compared to the performance of other mutual funds
in general, or to the performance of particular types of mutual funds. These
comparisons may be expressed as mutual fund rankings prepared by Lipper
Analytical Services, Inc. (Lipper), an independent service which monitors the
performance of mutual funds. Lipper generally ranks funds on the basis of total
return, assuming reinvestment of distributions, but does not take sales charges
or redemption fees into consideration, and is prepared without regard to tax
consequences. In addition to the mutual fund rankings, the Fund's performance
may be compared to mutual fund performance indices prepared by Lipper.
G.T. Global may provide information designed to help individuals understand
their investment goals and explore various financial strategies. For example,
G.T. Global may describe general principles of investing, such as asset
allocation, diversification and risk tolerance.
Ibbotson Associates of Chicago, Illinois (Ibbotson) provides historical returns
of the capital markets in the United States, including common stocks, small
capitalization stocks, long-term corporate bonds, intermediate-term government
bonds, long-term government bonds, Treasury bills, the U.S. rate of inflation
(based on the CPI), and combinations of various capital markets. The performance
of these capital markets is based on the returns of different indices.
G.T. Global Funds may use the performance of these capital markets in order to
demonstrate general risk-versus-reward investment scenarios. Performance
comparisons may also include the value of a hypothetical investment in any of
these capital markets. The risks associated with the security types in any
capital market may or may not correspond directly to those of the funds.
Ibbotson calculates total returns in the same method as the funds. The funds may
also compare performance to that of other compilations or indices that may be
developed and made available in the future.
In advertising materials, G.T. Global may reference or discuss its products and
services, which may include: retirement investing; the effects of dollar-cost
averaging and saving for college or a home. In addition, G.T. Global may quote
financial or business publications and periodicals, including model portfolios
or allocations, as they relate to fund management, investment philosophy, and
investment techniques.
The Fund may discuss its Quotron number, CUSIP number, and its current portfolio
management team.
From time to time, the Fund's performance also may be compared to other mutual
funds tracked by financial or business publications and periodicals. For
example, the fund may quote Morningstar,Inc. in its advertising materials.
Morningstar, Inc. is a mutual fund rating service that rates mutual funds on the
basis of risk-adjusted performance. In addition, the Fund may quote financial or
business publications and periodicals as they relate to fund management,
investment philosophy, and investment techniques. Rankings that compare the
performance of G.T. Global Funds to one another in appropriate categories over
specific periods of time may also be quoted in advertising.
The Fund may quote various measures of volatility and benchmark correlation such
as beta, standard deviation and R(2) in advertising. In addition, the fund may
compare these measures to those of other funds. Measures of volatility seek to
compare the fund's historical share price fluctuations or total returns compared
to those of a benchmark. Measures of benchmark correlation indicate how valid a
comparative benchmark may be. All measures of volatility and correlation are
calculated using averages of historical data.
Statement of Additional Information Page 32
<PAGE>
G.T. GLOBAL EMERGING MARKETS FUND
The Fund may advertise examples of the effects of periodic investment plans,
including the principle of dollar cost averaging. In such a program, an investor
invests a fixed dollar amount in a fund at periodic intervals, thereby
purchasing fewer shares when prices are high and more shares when prices are
low. While such a strategy does not assure a profit or guard against loss in a
declining market, the investor's average cost per share can be lower than if
fixed numbers of shares are purchased at the same intervals. In evaluating such
a plan, investors should consider their ability to continue purchasing shares
through periods of low price levels.
Each Fund may be available for purchase through retirement plans of other
programs offering deferral of or exemption from income taxes, which may produce
superior after tax returns over time. For example, a $10,000 investment earning
a taxable return of 10% annually would have an after-tax value of $17,976 after
ten years, assuming tax was deducted from the return each year at a 39.6% rate.
An equivalent tax-deferred investment would have an after-tax value of $19,626
after ten years, assuming tax was deducted at a 39.6% rate from the deferred
earnings at the end of the ten-year period.
The Fund may describe in its sales material and advertisements how an investor
may invest in the G.T. Global Funds through various retirement plans that offer
deferral of income taxes on investment earnings and may also enable you to make
pre-tax contributions. Because of their advantages, these retirement plans may
produce returns superior to comparable non-retirement investments. The Funds may
also discuss these plans which include:
INDIVIDUAL RETIREMENT ACCOUNTS (IRAS): Any individual who receives earned income
from employment (including self-employment) can contribute up to $2,000 each
year to an IRA (or if less, 100% of compensation). If your spouse is not
employed, a total of $2,250 may be contributed each year to IRAs set up for you
and your spouse (subject to the maximum of $2,000 to either IRA). Some
individuals may be able to take an income tax deduction for the contribution.
Regular contributions may not be made for the year you become 70 1/2, or
thereafter. Please consult your tax advisor for more information.
ROLLOVER IRAS: Individuals who receive distributions from qualified retirement
plans (other than required distributions) and who wish to keep their savings
growing tax-deferred can rollover (or make a direct transfer of) their
distribution to a Rollover IRA. These accounts can also receive rollovers or
transfers from an existing IRA. If an "eligible roll-over distribution" from a
qualified employer-sponsored retirement plan is not directly rolled over to an
IRA (or certain qualified plans), withholding at the rate of 20% will be
required for federal income tax purposes. A distribution from a qualified plan
that is not an "eligible rollover distribution," including a distribution that
is one of a series of substantially equal periodic payments, generally is
subject to regular wage withholding or withholding at the rate of 10% (depending
on the type and amount of the distribution), unless you elect not to have any
withholding apply. Please consult your tax advisor for more information.
SEP-IRAS AND SALARY-REDUCTION SEP-IRAS: Simplified employee pension (SEP) plans
and salary-reduction SEPs provide self-employed individuals (and any eligible
employees) with benefits similar to Keogh-type plans or 401(k) plans, but with
fewer administrative requirements and therefore potential lower annual
administration expenses.
403(B)(7) CUSTODIAL ACCOUNTS: Employees of public schools and most other
not-for-profit corporations can make pre-tax salary reduction contributions to
these accounts.
401(K), PROFIT SHARING (INCLUDING 401(K)) AND MONEY PURCHASE PENSION
PLANS: Corporations can sponsor these qualified defined contribution plans for
their employees. A 401(k) plan, a type of profit sharing plan, additionally
permit the eligible, participating employees to make pre-tax salary reduction
contributions to the plan (up to certain limitations).
G.T. Global may from time to time in its sales methods and advertising discuss
the risks inherent in investing. The major types of investment risk are market
risk, industry risk, credit risk, interest rate risk and inflation risk. Risk
represents the possibility that you may lose some or all of your investment over
a period of time. A basic tenet of investing is the greater the potential
reward, the greater the risk.
From time to time, the Funds and G.T. Global will quote information including
but not limited to data regarding: individual countries, regions, world stock
exchanges, and economic and demographic statistics from sources G.T. Global
deems reliable including but not limited to the economic and financial data of
the referenced financial organizations such as:
1) Stock market capitalization: Morgan Stanley Capital International World
Indices, International Finance Corporation and Datastream.
2) Stock market trading volume: Morgan Stanley Capital International World
Indices, International Finance Corporation.
Statement of Additional Information Page 33
<PAGE>
G.T. GLOBAL EMERGING MARKETS FUND
3) The number of listed companies: International Finance Corporation, G.T.
Guide to World Equity Markets, Salomon Brothers, Inc., S.G. Warburg and
Barings Securities.
4) Wage rates: U.S. Department of Labor Statistics and Morgan Stanley Capital
International World Indices.
5) International industry performance: Morgan Stanley Capital International
World Indices, Wilshire Associates and Salomon Brothers, Inc.
6) Stock market performance: Morgan Stanley Capital International World
Indices, International Finance Corporation and Datastream.
7) The Consumer Price Index and inflation rate: The World Bank, Datastream and
International Finance Corporation.
8) Gross Domestic Product (GDP): Datastream and The World Bank.
9) GDP growth rate: International Finance Corporation, The World Bank and
Datastream.
10) Population: The World Bank, Datastream and United Nations.
11) Average annual growth rate (%) of population: The World Bank, Datastream and
United Nations.
12) Age distribution within populations: Organization for Economic Cooperation
and Development and United Nations.
13) Total exports and imports by year: International Finance Corporation, The
World Bank and Datastream.
14) Top three companies by country or market: International Finance Corporation,
G.T. Guide to World Equity Markets, Salomon Brothers Inc., S.G. Warburg and
Barings Securities.
15) Foreign direct investments to developing countries: The World Bank and
Datastream.
16) Supply, consumption, demand and growth in demand of certain products,
services and industries, including, but not limited to, electricity, water,
transportation, construction materials, natural resources, financial
services, health care services and supplies, consumer products and services
and telecommunications equipment and services (sources of such information
may include, but would not be limited to, The World Bank, OECD, IMF,
Bloomberg and Datastream).
In advertising and sales materials, G.T. Global may make reference to or discuss
its products, services and accomplishments. Among these accomplishments are that
in 1983 G.T. Global provided assistance to the government of Hong Kong in
linking its currency to the U.S. dollar, and that in 1987 Japan's Ministry of
Finance licensed G.T. Management (Japan) Ltd. as one of the first foreign
discretionary investment managers for Japanese investors. Such accomplishments,
however, should not be viewed as an endorsement of G.T. Global by the government
of Hong Kong, Japan's Ministry of Finance or any other government or government
agency. Nor do any such accomplishments of G.T. Global provide any assurance
that the G.T. Global Mutual Funds' investment objectives will be achieved.
THE G.T. ADVANTAGE
With respect to G.T. Global Emerging Markets Fund, G.T. Capital has developed a
unique team approach to its emerging markets money management. G.T.'s economists
and strategists in Hong Kong determine the geographic allocation of the Fund's
assets according to each country's relative industrial development, potential
for productivity gains, and the likely impact of financial liberalization. Then,
G.T. portfolio managers in London, San Francisco, Hong Kong and Singapore
identify the individual securities that they believe have the strongest
long-term growth potential in each emerging market. Generally, securities in
Asia are selected by managers in Hong Kong; San Francisco-based managers look
for opportunities in Latin America; and European securities are selected by
London-based personnel.
For the other funds in the G.T. Global Group of Mutual Funds, G.T. Capital has
developed a unique team approach to its global money management which we call
the G.T. Advantage. G.T. Capital's money management style combines the best of
the "top-down" and "bottom-up" investment manager strategies. The top-down
approach is implemented by G.T. Capital's Investment Policy Committee which sets
broad guidelines for asset allocation and currency management based on G.T.
Capital's own macroeconomic forecasts and research from our worldwide offices.
The bottom-up approach utilizes regional teams of individual portfolio managers
to implement the committee's guidelines by selecting local securities that offer
strong growth potential.
Statement of Additional Information Page 34
<PAGE>
G.T. GLOBAL EMERGING MARKETS FUND
From time to time the Fund and G.T. Global may quote data for stock market
trading volume and number of listed companies from information provided by the
International Finance Corporation (IFC) for, but not limited to, the following
countries:
NUMBER OF LISTED COMPANIES AND TRADING VOLUME
<TABLE>
<CAPTION>
NUMBER OF ANNUAL
LISTED TRADING VOLUME
COMPANIES (US$ MILLIONS)
----------- ---------------
<S> <C> <C>
Canada............................................................................. 1,124 142,222
U.S................................................................................ 7,607 3,507,223
Argentina.......................................................................... 180 10,339
Brazil............................................................................. 550 57,409
Chile.............................................................................. 263 2,797
Colombia........................................................................... 89 732
Mexico............................................................................. 190 62,454
Venezuela.......................................................................... 93 1,874
Korea.............................................................................. 693 211,710
Philippines........................................................................ 180 6,785
Taiwan............................................................................. 183 43,395
India.............................................................................. 6,800 21,879
Indonesia.......................................................................... 174 9,158
Malaysia........................................................................... 410 153,661
Pakistan........................................................................... 653 1,844
Hong Kong.......................................................................... 450 131,550
Singapore.......................................................................... 178 81,623
Japan.............................................................................. 2,155 954,341
Australia.......................................................................... 1,070 67,711
New Zealand........................................................................ 136 6,785
Greece............................................................................. 143 2,713
Jordan............................................................................. 101 1,377
Nigeria............................................................................ 174 10
Portugal........................................................................... 183 4,835
Turkey............................................................................. 152 23,242
UK................................................................................. 1,646 423,526
France............................................................................. 472 174,283
Germany............................................................................ 426 302,985
<FN>
- --------------
Source: Emerging Stock Markets Factbook 1994, International Finance Corporation
(IFC), June 1994.
</TABLE>
From time to time the Fund and G.T. Global may also quote information similar to
that shown above including such data from established markets from, but not
limited to, other sources such as S.G. Warburg, Salomon Brothers and Datastream.
Statement of Additional Information Page 35
<PAGE>
G.T. GLOBAL EMERGING MARKETS FUND
EQUITY MARKET DIVERSIFICATION
As indicated by the following table, the global diversification of one's equity
investments may result in increased returns and reduced risk (as measured by
price volatility) relative to a portfolio consisting solely of U.S. equities.
The following table was prepared by G.T. Capital. It uses the Morgan Stanley
Capital International EAFE Index as a "proxy" for the non-North America
investment universe and the Standard & Poor's 500 Index as a "proxy" for the
universe of U.S. stocks. The table reflects the ten-year period ended December
31, 1994. All dividends and distributions were assumed to be reinvested.
EQUITY MARKET DIVERSIFICATION
10 YEARS ENDED DECEMBER 31, 1994
<TABLE>
<CAPTION>
PORTFOLIO STANDARD AVERAGE ANNUAL
% GLOBAL/% U.S. DEVIATION TOTAL RETURN
- ---------------------- ------------ -----------------
<S> <C> <C>
100/0 19.35% 17.89%
90/10 18.15% 17.59%
80/20 17.06% 17.27%
70/30 16.11% 16.95%
60/40 15.32% 16.61%
50/50 14.73% 16.27%
40/60 14.35% 15.92%
30/70 14.20% 15.56%
20/80 14.29% 15.19%
10/90 14.61% 14.81%
0/100 15.16% 14.42%
</TABLE>
Source: Morgan Stanley Capital International (MSCI) Europe, Australia, Far East
(EAFE)
Index vs. MSCI U.S. Index, December 31, 1994. Prepared by G.T. Capital
Management, Inc.
Standard deviation of returns is a statistical measure of the degree to which a
value tends to vary from its average annual mean. In general, greater risk must
be assumed to generate greater returns. This data will not correspond to the
actual performance of any of the G.T. Global Mutual Funds. There is no guarantee
that stock market diversification will provide greater total return and/or less
volatility than non-diversification during a particular time period.
Statement of Additional Information Page 36
<PAGE>
G.T. GLOBAL EMERGING MARKETS FUND
The Fund and G.T. Capital believe that certain political, economic and market
factors merit an investor's consideration of an emerging markets investment. In
analyzing emerging markets worldwide, G.T. Capital has identified several areas
that it expects will create investment opportunities. G.T. Capital believes that
political change and its related movement away from a military or socialist
government toward democratically elected governments, economic deregulation
including tax reform, tariff reductions, privatization of state-owned
businesses, and the elimination of price controls, and financial liberalization
with the adoption of free market policies and the removal of restrictions on the
free movement of capital in and out of the country, each will lead to growth in
developing markets around the world. Of course, there is no certainty that these
factors will produce the anticipated results. From time to time the Fund and
G.T. Global may mention countries where economic deregulation, financial
deregulation and privatization are taking place. The following chart provides
information on the key emerging trends as identified by G.T. Capital, occurring
in some of the world's emerging markets.
Foreign Direct Investment is defined by the World Bank as "investment that is
made to acquire a lasting interest (usually 10 percent of the voting stock) in
an enterprise operating in a country other than that of the investor, the
investor's purpose being an effective voice in the management of the
enterprise."
FOREIGN DIRECT INVESTMENT FLOWS
(US$ MILLIONS)
<TABLE>
<CAPTION>
1994
1989 1990 1991 1992 1993 ESTIMATE
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
All Developing Countries..................................... 25687.1 26711.7 36810.1 47076.4 66614 77918.4
East Asia and Pacific........................................ 9094.5 11071.1 13960.7 20887.4 36504.5 42717
Europe and Central Asia...................................... 3480.9 4711.7 7011.5 8529.7 9630.7 11133.9
Latin America and the Caribbean.............................. 8155.1 7937.5 12288.8 13631.3 16139.3 18875
Middle East and North Africa................................. 1965.7 1596.7 1211.2 1582.8 1716.8 2107
South Asia................................................... 486.9 540.3 456.5 622.8 840.9 845
Sub-Saharan Africa........................................... 2504 854.4 1881.4 1822.4 1781.9 2240.5
</TABLE>
- --------------
Source: FINANCIAL FLOWS AND THE DEVELOPING COUNTRIES 1995. The World Bank, April
1993.
NOTE: The data in the chart above is based on the World Bank's definition of
developing countries which does not correspond country-to-country with the
emerging markets in which the Fund may invest. Certain countries that may be
viewed as emerging markets by G.T. Global (for example, Hong Kong and Singapore)
are not considered to be developing countries by the World Bank.
Statement of Additional Information Page 37
<PAGE>
G.T. GLOBAL EMERGING MARKETS FUND
G.T. believes that before emerging market countries with high debt levels can
attract substantial amounts of foreign capital, they must put their financial
houses in order. Some emerging markets governments have implemented debt
restructuring programs. From time to time, the Fund may include in its
advertising and sales material information on emerging market countries' debt
restructuring activities.
COUNTRIES CURRENTLY RESTRUCTURING UNDER
THE BRADY PLAN:
<TABLE>
<CAPTION>
FIRST BOND
ISSUANCE
------------------
<S> <C>
Mexico............................................................................ March 1990
Costa Rica........................................................................ May 1990
Venezuela......................................................................... December 1990
Uruguay........................................................................... February 1991
Nigeria........................................................................... January 1992
Philippines....................................................................... December 1992
Argentina......................................................................... April 1993
Brazil............................................................................ April 1994
Bulgaria.......................................................................... July 1994
Dominican Republic................................................................ August 1994
Poland............................................................................ October 1994
Ecuador........................................................................... In progress
Peru.............................................................................. In progress
Panama............................................................................ In progress
</TABLE>
Source: G.T. CAPITAL MANAGEMENT, INC., MAY 1995
The Fund and G.T. Capital believe the need for infrastructure improvements in
emerging markets is enormous and increased commitment to infrastructure
development can lead to increased industrial output. Although G.T. Capital
expects this scenario to continue to benefit emerging markets, no assurances can
be made in this regard.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
ROAD CONSTRUCTION DOUBLES IN TWENTY YEARS
<S> <C>
Percent increase of paved roads (km) from 1970 to
1990
South Korea 847%
Indonesia 453%
Thailand 313%
Pakistan 250%
Brazil 219%
Turkey 140%
India 134%
Singapore 128%
Many emerging market economies have been focusing on improving infrastructure.
All of the above listed countries have doubled the number of kilometers of
paved
roads in only twenty years.
Source: The World Bank, World Development Report 1994, June 1994.
</TABLE>
Statement of Additional Information Page 38
<PAGE>
G.T. GLOBAL EMERGING MARKETS FUND
From time to time the Fund and G.T. Global may quote information on
sector/industry stock market capitalization and total returns for, but not
limited to, the following Morgan Stanley Capital International industry indices:
MORGAN STANLEY CAPITAL INTERNATIONAL
INTERNATIONAL INDUSTRY INDICES DECEMBER 31, 1994 (US$ WITHOUT DIVIDENDS)
<TABLE>
<CAPTION>
ANNUALIZED RETURNS (%)
MARKET CAPITALIZATION ------------------------------------
(US$ BN) 1 YEAR 3 YEARS 5 YEARS 10 YEARS
--------------------- ------ ------- ------- --------
<S> <C> <C> <C> <C> <C>
ENERGY
Energy Sources.................................. 447.6 5.40 4.05 2.35 10.72
Utilities -- Electrical & Gas................... 412.8 -11.94 -0.05 -1.03 9.88
Sector........................................ 860.4
MATERIALS
Building Materials & Components................. 107.9 -4.87 5.17 -1.34 13.68
Chemicals....................................... 303.5 15.59 7.33 2.47 14.06
Forest Products & Paper......................... 111.2 9.97 5.74 0.96 10.76
Metals -- Non Ferrous........................... 92.1 12.77 9.54 1.49 10.42
Metals -- Steel................................. 109.8 26.99 6.24 -7.78 13.56
Misc. Materials & Commodities................... 73.1 9.52 6.97 -0.72 12.00
Sector........................................ 797.6
CAPITAL EQUIPMENT
Aerospace & Military Technology................. 59.1 6.34 8.97 6.06 7.13
Construction & Housing.......................... 103.1 2.36 -5.42 -9.33 16.82
Data Processing & Reproduction.................. 107.0 22.96 -0.53 -3.43 -1.20
Electrical & Electronics........................ 264.9 3.77 7.35 2.80 11.80
Electronic Components & Instruments............. 177.2 15.59 7.33 2.47 14.06
Energy Equipment & Services..................... 20.7 -13.03 -3.86 -3.90 3.21
Industrial Components........................... 126.7 16.11 14.02 2.49 12.22
Machinery & Engineering......................... 177.8 18.97 9.29 0.32 14.45
Sector........................................ 1036.5
CONSUMER GOODS
Appliances & Household Durables................. 136.5 18.11 10.40 0.39 11.20
Automobiles..................................... 233.7 12.06 15.36 2.61 12.27
Beverages & Tobacco............................. 260.5 4.93 -1.30 6.57 18.26
Food & Household Products....................... 277.8 5.12 2.10 4.68 17.21
Health & Personal Care.......................... 517.4 9.54 -0.91 8.69 17.09
Recreation, Other Consumer Goods................ 93.5 9.20 4.78 1.49 9.86
Textiles & Apparel.............................. 30.9 5.21 -3.29 -5.32 11.12
Sector........................................ 1550.3
SERVICES
Broadcasting & Publishing....................... 145.4 0.80 13.97 5.08 13.77
Business & Public Services...................... 267.2 9.71 10.04 5.61 13.82
Leisure & Tourism............................... 114.3 -2.56 11.13 3.04 15.59
Merchandising................................... 389.4 -2.54 2.66 5.45 15.15
Telecommunications.............................. 375.5 -5.99 5.72 3.36 11.47
Transportation -- Airlines...................... 50.1 4.61 0.86 -3.68 10.67
Transportation -- Road & Rail................... 103.8 -0.70 3.59 -4.67 12.25
Transportation -- Shipping...................... 36.5 7.17 4.04 -4.12 15.00
Wholesale & International Trade................. 66.0 35.10 9.31 -3.01 14.63
Sector........................................ 1546.2
FINANCE
Banking......................................... 1008.9 0.71 4.63 -0.66 15.28
Financial Services.............................. 181.9 8.01 5.29 -2.93 13.77
Insurance....................................... 282.9 -2.55 5.06 1.34 13.21
Real Estate..................................... 110.6 -20.78 6.62 0.21 15.36
Sector........................................ 1584.3
MULTI INDUSTRY
Multi-Industry.................................. 237.6 -6.75 7.70 4.66 11.80
Sector........................................ 237.6
GOLD MINES
Gold Mines...................................... 37.8 -11.16 14.07 0.20 2.37
Sector........................................ 37.8
<FN>
- --------------
The Fund(s) and G.T. Global may also quote information from, but not limited to,
the International Finance Corporation (IFC), S.G. Warburg, Salomon Brothers,
World Scope, Bloomberg, Datastream and Wilshire Associates, Inc.
</TABLE>
The investment objectives and policies of the G.T. Global Mutual Funds and their
portfolios and performance will not correspond to the composition and
performance of MSCI industry indices.
Statement of Additional Information Page 39
<PAGE>
G.T. GLOBAL EMERGING MARKETS FUND
From time to time the Fund and G.T. Global may quote information on stock market
capitalization and total returns for, but not limited to, the following Morgan
Stanley Capital International stock market indices:
MORGAN STANLEY CAPITAL INTERNATIONAL
INTERNATIONAL INDICES 12/31/94 (US$, GROSS DIVIDENDS REINVESTED)
<TABLE>
<CAPTION>
MARKET ANNUALIZED RETURNS (%)
CAPITALIZATION ------------------------------------
(US$BN) 1 YEAR 3 YEARS 5 YEARS 10 YEARS
-------------- ------ ------- ------- --------
<S> <C> <C> <C> <C> <C>
INTERNATIONAL INDICES
THE WORLD............................. 7,592.9 5.58 7.42 4.24 15.51
NORTH AMERICA......................... 2,918.2 1.73 6.07 8.52 13.94
EAFE.................................. 4,661.8 8.06 8.19 1.82 17.89
EUROPE 14............................. 2,084.1 2.66 8.46 6.98 18.99
NORDIC COUNTRIES...................... 156.2 20.57 11.62 5.06 19.79
PACIFIC............................... 2,577.6 13.03 7.93 -1.62 17.06
FAR EAST.............................. 2,436.8 13.45 7.78 -2.07 17.22
FREE INDICES
THE WORLD FREE........................ 7,602.4 5.57 7.43 4.27
EAFE FREE............................. 4,671.3 -4.17 7.57 1.78
EUROPE 14 FREE........................ 2,080.5 -3.09 8.28 7.11
EUROPE 14 FREE EX UK.................. -0.57 10.02 6.44
NORDIC COUNTRIES FREE................. 152.6 4.91 12.16 6.51
PACIFIC FREE.......................... 2,590.0 -5.04 7.06 -1.76
PACIFIC FREE EX JAPAN................. -18.65 14.34 14.00
FAR EAST FREE......................... -4.81 6.91 -2.18
SPECIAL AREAS
THE WORLD EX USA...................... 7.64 7.93 1.76 17.13
EAFE + CANADA......................... 7.65 7.89 1.76 17.29
KOKUSAI (WORLD EX JAPAN).............. 0.55 7.85 8.35 15.51
EASEA (EAFE EX JAPAN)................. -0.77 9.83 8.05 18.98
PACIFIC EX JAPAN...................... -13.99 18.42 15.31 18.80
THE WORLD EX THE UK................... 6.48 7.63 3.82 15.21
EAFE EX THE UK........................ 10.22 8.74 0.70 17.97
EUROPE 14 EX THE UK................... 1,351.6 5.27 10.22 6.08 19.87
THE WORLD EX AUSTRALIA................ 5.57 7.39 4.19 15.51
National Indices
AUSTRALIA............................. 122.8 6.48 9.48 8.37 15.98
AUSTRIA............................... 17.5 -6.05 2.74 0.40 23.31
BELGIUM............................... 48.5 9.43 10.92 7.23 24.90
CANADA................................ 168.1 -2.43 0.76 0.12 8.17
DENMARK............................... 34.4 4.25 0.09 3.17 17.17
FINLAND............................... 25.9 52.47 34.70 6.81
FINLAND FREE.......................... 25.9 52.47 33.65 7.77
FRANCE................................ 275.0 -4.70 6.20 4.23 20.83
GERMANY............................... 290.1 5.11 8.95 5.09 18.73
GREECE................................ 7.6 -0.78 -0.81 8.05
HONG KONG............................. 154.1 -28.90 26.79 27.18 26.50
IRELAND............................... 12.1 14.50 8.71 3.71
ITALY................................. 98.5 12.13 4.52 -1.54 17.14
JAPAN................................. 2,121.1 21.62 6.36 -3.43 16.86
MALAYSIA.............................. 105.3 -19.94 25.57 13.86
NETHERLANDS........................... 163.9 12.66 16.74 13.18 22.05
NEW ZEALAND........................... 18.1 10.27 23.39 7.57
NORWAY................................ 18.5 24.07 11.39 3.49 16.03
NORWAY FREE........................... 14.8 27.41 13.14 4.78
PORTUGAL.............................. 8.5 11.95 8.01 -3.48
SINGAPORE............................. 56.3 6.68 23.95 16.02 16.50
SINGAPORE FREE........................ 69.5 5.81 24.23 18.65
</TABLE>
Statement of Additional Information Page 40
<PAGE>
G.T. GLOBAL EMERGING MARKETS FUND
<TABLE>
<CAPTION>
MARKET ANNUALIZED RETURNS (%)
CAPITALIZATION ------------------------------------
(US$BN) 1 YEAR 3 YEARS 5 YEARS 10 YEARS
-------------- ------ ------- ------- --------
<S> <C> <C> <C> <C> <C>
SPAIN................................. 80.0 -3.93 -0.08 0.37 20.05
SWEDEN................................ 77.4 18.80 12.22 5.37 21.43
SWEDEN FREE........................... 77.4 18.80 15.40 7.70
SWITZERLAND........................... 210.0 4.18 21.77 14.81 21.32
SWITZERLAND FREE...................... 210.0 4.18 21.97 14.85
UNITED KINGDOM........................ 732.6 -1.63 5.65 8.58 17.73
USA................................... 2,750.1 2.00 6.42 9.16 14.36
EAFE (GDP WEIGHTED)................... 8.21 9.65 3.97 19.91
EMERGING MARKETS
EMG (EMERGING MARKETS GLOBAL)......... 840.4 -1.07 20.41 9.52
EMG FAR EAST.......................... 469.4 1.05 21.99 2.43
EMG LATIN AMERICA..................... 281.0 -3.69 19.73 32.62
EMF (EMERGING MARKETS FREE)........... 594.2 -7.32 21.76 20.89
EMF FAR EAST.......................... 235.5 -13.97 26.90 13.12
EMF LATIN AMERICA..................... 268.7 0.64 20.66 32.23
INDIA................................. 55.2 9.93
INDONESIA............................. 22.1 -25.92 14.98 -2.15
KOREA................................. 121.5 23.67 18.17 0.26
MALAYSIA.............................. 105.3 -19.94 25.57 13.86
PAKISTAN.............................. 6.9 -7.09 0.00 0.00
PHILIPPINES........................... 20.9 0.80 47.51 21.44
PHILIPPINES FREE...................... 13.2 -7.88 41.69 23.46
SRI LANKA............................. 1.3 -3.03
TAIWAN................................ 129.0 20.78 19.40 -2.98
THAILAND.............................. 70.6 -9.03 35.86 17.47
ARGENTINA............................. 24.2 -23.63 -9.39 28.67
BRAZIL................................ 94.8 65.73 46.49 26.87
CHILE................................. 38.8 44.76 34.06 46.83
COLOMBIA.............................. 7.3 21.30
MEXICO................................ 108.4 -43.39 2.94 29.69
MEXICO FREE........................... 96.7 -40.55 3.53 32.47
PERU.................................. 4.3 45.42
VENEZUELA............................. 3.0 -34.14
VENEZUELA FREE........................ 2.4 -14.55
GREECE................................ 7.6 -0.78 -0.81 8.05
ISRAEL................................ 13.2
ISRAEL - DOMESTIC..................... 10.9
ISRAEL - NON DOMESTIC................. 2.3
JORDAN................................ 1.2 -8.70 15.66 10.60
PORTUGAL.............................. 8.5 11.95 8.01 -3.48
TURKEY................................ 9.3 -50.49 -4.23 -7.47
COMBINED FAR EAST FREE................ 2,580.2 12.07 8.44 -1.68
COMBINED FAR EAST EX JAPAN............ 679.8 -7.40 24.17 9.17
COMBINED FAR EAST FREE EX JAPAN....... 459.2 -17.48 26.91 20.14
EAFE + EMG............................ 5,396.8 6.42 8.79 2.22
EAFE + EMF............................ 5,150.7 5.91 8.39 2.25
ALL-COUNTRY WORLD INDEX............... 8,344.7 3.85 7.50 4.21
</TABLE>
The Fund and G.T. Global may also quote information similar to that shown above
from other sources, but not limited to, the International Finance Corporation
(IFC) S.G. Warburg, Salomon Brothers, Wilshire Associates, Inc. and Datastream.
Market capitalization is not a measure of investment performance. Accordingly,
the above market capitalization figures are not intended to illustrate
investment performance in any individual developing market. Although the period
from December 31, 1984 to December 31, 1994 was one of growing market
capitalization throughout the world, market capitalization in certain emerging
markets encountered periods of volatility rather than a steadily increasing
trend.
The investment objectives of the G.T. Global Mutual Funds and their portfolios
and performance will not correspond to the composition and performance of the
MSCI indices.
Statement of Additional Information Page 41
<PAGE>
G.T. GLOBAL EMERGING MARKETS FUND
From time to time the Fund and G.T. Global may quote information on the top
companies listed on an exchange or index for countries such as, but not limited
to, the following:
<TABLE>
<CAPTION>
THREE LARGEST COMPANIES
<S> <C>
MEXICO Telmex
Banacci
Tlevisa
CHILE Telefonos
Endesa
Enersis
ARGENTINA YPF
Telefonica de Argentina
Telecom Arg. Stet-France Telecom.
BRAZIL Telebras
Electrobras
Petrobras
JAPAN Mitsubishi Bank
Industrial Bank of Japan
Toyota Motor
HONG KONG HSBC Holdings plc
Hong Kong Telecommunications
Sun Hung Kai Properties
SOUTH KOREA KEPCO
POSCO
Samsung Electronics
TAIWAN Cathjay Life Insurance Co. Ltd.
Hua Nan Commercial Bank
First Commercial Bank
SINGAPORE Singapore Telecom Ltd.
OCBC Bank Ltd.
Singapore Airlines Ltd.
MALAYSIA TNB
Telekom
Resorts
THAILAND Telecomasia
Bangkok Bank
Shinawatra
INDONESIA Barito Pacific Timber
Astra Int'l Inc
H M Sampoerna
PHILIPPINES San Miguel Corp. (A & B)
Philippine Long Distance Telephone Co.
Ayala Corp. (A & B)
AUSTRALIA BHP
News Corporation
National Australia Bank
<CAPTION>
THREE LARGEST COMPANIES
<S> <C>
NEW ZEALAND Telecom Corporation of New Zealand Ltd.
Carter Holt Harvey Ltd.
Fletcher Challenge Ltd - Ordinary Division
UNITED KINGDOM British Telecommunications
HSBC Holdings
Shell Transport & Trading Co. (The)
GERMANY Allianz AG Holding N-AKT
Siemens AG
Deutsche Bank AG
FRANCE Alcatel Alsthom
Elf Aquitaine
Eaux (Cie Gie des)
NETHERLANDS Royal Dutch
Unilever Cert.
Internationale Nederlanden Groep
SPAIN Endesa
Telefonica
Bayer AG
ITALY Generali Assicurazioni
Sip
Stet
SWITZERLAND Roche
Nestle
UBS
SWEDEN Astra
Ericsson
ASEA
DENMARK Novo Nordisk B
Den Danske Bank
Sophus Berendsen
NORWAY Norsk Hydro
Hafslund Nycomed
Kvaerner
FINLAND Nokia Corporation
Repola Ltd.
Kymmene Corporation
U.S. (NYSE) Exxon Corp.
General Electric Co.
Coca Cola Co.
CANADA General Motors
Mobil Corporation
Ford Motor Co.
<FN>
- ------------------
Source: The G. T. Guide to World Equity Markets 1994-1995. Euromoney
Publications Plc, 1994.
</TABLE>
From time to time G.T. Global and the Fund will quote information similar to
that shown above from sources other than G.T. Capital Management Inc. such as,
but not limited to, S.G. Warburg, Morgan Stanley Capital International and World
Scope. There can be no assurance that any of the G.T. Global Mutual Funds will
own or will continue to own the securities of the companies listed above.
Statement of Additional Information Page 42
<PAGE>
G.T. GLOBAL EMERGING MARKETS FUND
From time to time the Fund and G.T. Global may quote data for GDP, GDP Growth,
Population, Per Capita GDP, Total Exports, Total Imports and Inflation Rates
for, but not limited to, the following countries:
<TABLE>
<CAPTION>
GDP (US$ GDP GROWTH POPULATION TOTAL EXPORTS TOTAL IMPORTS INFLATION
MILLIONS) RATE (%) (MILLIONS) (US$ MILLIONS) (US$ MILLIONS) RATE (%)
-------------- ---------- ---------- -------------- -------------- --------
<S> <C> <C> <C> <C> <C> <C>
Hong Kong............................... 77,828 5.5 5.8 30,251 123,427 8.5
China................................... 506,075 13.1 1162.2 84,940 80,585 13.0
South Korea............................. 296,136 5.3 43.7 76,394 81,413 4.8
Taiwan.................................. n/a 5.7 n/a 88,337 70,071 2.9
Singapore............................... 46,025 9.8 2.8 63,386 72,067 2.4
Malaysia................................ 57,568 7.4 18.6 40,705 38,361 3.6
Indonesia............................... 126,364 6.5 184.3 33,815 27,280 9.7
Thailand................................ 110,337 7.8 58.0 32,473 40,466 3.3
Philippines............................. 52,462 1.8 64.3 9,790 15,465 7.6
India................................... 214,598 4.1 883.6 19,795 22,530 9.9
Pakistan................................ 41,904 5.1 119.3 7,264 9,360 8.7
Australia............................... 294,760 3.0 17.5 38,045 42,140 1.1
New Zealand............................. 41,304 3.7 3.4 9,338 9,200 1.6
Japan................................... 3,670,979 0.1 124.5 339,492 230,975 1.3
Brazil.................................. 360,405 5.0 153.9 35,956 23,115 2,103.3
Mexico.................................. 329,011 0.4 85.0 27,166 47,877 9.8
Argentina............................... n/a 6.0 33.1 12,235 14,864 10.6
Venezuela............................... 61,137 -1.0 20.2 13,997 12,222 38.7
Chile................................... 41,203 6.0 13.6 9,646 9,456 12.7
Portugal................................ 79,547 -0.8 9.8 18,541 30,482 6.8
Turkey.................................. 99,696 6.8 58.5 14,715 22,871 65.5
Poland.................................. 83,823 4.0 38.4 13,324 15,309 35.3
Hungary................................. 35,218 -1.6 10.3 10,700 11,078 22.5
Greece.................................. 67,278 n/a 10.3 9,842 23,407 14.0
United Kingdom.......................... 903,126 1.9 57.8 190,481 221,658 3.4
France.................................. 1,319,883 -0.7 57.4 231,452 238,299 2.1
Netherlands............................. 320,290 3.0 15.2 139,919 134,376 1.5
Spain................................... 574,844 -1.0 39.1 64,302 99,473 4.3
Italy................................... 1,222,962 -7.0 57.8 178,349 184,510 4.4
Switzerland............................. 241,406 -0.7 6.9 65,616 65,603 2.3
Sweden.................................. 220,834 -1.7 8.7 55,933 49,849 2.9
Norway.................................. 112,906 1.8 4.3 35,178 25,897 2.4
Finland................................. 93,869 -2.6 5.0 23,515 20,741 1.2
Denmark................................. 123,546 0.3 5.2 39,570 33,601 1.2
United States........................... 5,920,199 3.0 255.4 420,812 551,591 3.0
<FN>
- --------------
Sources: 1992 GDP, mid-1992 population, 1992 exports and 1992 imports, The World
Development Report 1994. The World Bank, June 1994; 1993 GDP Growth Rate and
1993 Inflation Rate, World Economic Outlook -- October 1994, International
Monetary Fund, October 1994.
</TABLE>
G.T. Global and the Fund may also quote the information from other sources such
as, but not limited to, International Financial Statistics, an IMF publication,
and Trends in Developing Economies, a World Bank publication.
Statement of Additional Information Page 43
<PAGE>
G.T. GLOBAL EMERGING MARKETS FUND
WAGE RATES
From time to time the Fund and G.T. Global may quote data on wage rates for, but
not limited to, the following countries:
<TABLE>
<CAPTION>
US$ PER
HOUR
-----------
<S> <C>
Germany.............................................................................................. $ 25.56
Switzerland.......................................................................................... $ 22.66
Japan................................................................................................ $ 19.20
Sweden............................................................................................... $ 17.91
U.S.................................................................................................. $ 16.79
Canada............................................................................................... $ 16.36
France............................................................................................... $ 16.31
Italy................................................................................................ $ 15.97
UK................................................................................................... $ 12.82
Australia............................................................................................ $ 12.25
Spain................................................................................................ $ 11.53
New Zealand.......................................................................................... $ 8.01
Singapore............................................................................................ $ 5.38
South Korea.......................................................................................... $ 5.37
Taiwan............................................................................................... $ 5.23
Asian NIE's.......................................................................................... $ 5.15
Portugal............................................................................................. $ 4.60
Hong Kong............................................................................................ $ 4.31
Mexico............................................................................................... $ 2.65
<FN>
- --------------
Source: U.S. Department of Labor, Bureau of Labor Statistics, International
Comparison of Hourly Compensation Costs for Production Workers in Manufacturing,
1993, Report 873, June 1994.
</TABLE>
G.T. Global and the Fund may also quote information similar to that shown above
from other sources such as, but not limited to, S.G. Warburg and Morgan Stanley
International.
Statement of Additional Information Page 44
<PAGE>
G.T. GLOBAL EMERGING MARKETS FUND
From time to time, each Fund and G.T. Global may quote and compare real GDP
growth rates of emerging and established countries.
REAL GDP GROWTH RATES (ANNUAL PERCENT CHANGE)
<TABLE>
<CAPTION>
ESTABLISHED EMERGING
COUNTRIES COUNTRIES
----------- ---------
<S> <C> <C>
1993................................................................................... 1.2% 6.1%
1992................................................................................... 1.6% 5.9%
1991................................................................................... 0.6% 4.4%
1990................................................................................... 2.4% 3.7%
1989................................................................................... 3.3% 4.0%
1988................................................................................... 4.4% 5.3%
1987................................................................................... 3.2% 5.7%
1986................................................................................... 2.9% 5.0%
<FN>
- --------------
Source: International Monetary Fund, World Economic Outlook -- October 1994,
October 1994.
</TABLE>
IMPORTANT POINTS TO NOTE ABOUT THE ABOVE DATA RELATING TO EMERGING MARKETS AND
EMERGING MARKETS WORLD MARKET CAPITALIZATION
The information contained above relating to foreign market performance and
market capitalization is based on sources believed to be reliable, but is
neither all-inclusive nor warranted as to accuracy by the Company or G.T.
Capital. The authors and publishers of such material are not to be considered as
"experts" under the Securities Act of 1933 on account of the inclusion of such
information herein.
A portion of the performance figures for each market includes the positive or
negative effects of the currency exchange rates effective at December 31 of each
year between the U.S. dollar and currency of the foreign market (e.g. Japanese
Yen, German Deutschemark, Hong Kong Dollar). A foreign currency which has
strengthened or weakened against the U.S. dollar will positively or negatively
affect the reported returns, as the case may be.
G.T. Global believes that the above information relating to foreign market
performance and market capitalization may be useful to investors considering
whether and to what extent to diversify their investments through the purchase
of mutual funds investing in securities on a global basis. However, this data is
not a representation of the past performance of the Fund, nor is it a prediction
of such performance. The performance of the Fund will differ from the historical
performance of the indices represented above. The performance of indices does
not take expenses into account, while the Fund incurs expenses in its operations
which will reduce performance. Moreover, the Fund is actively managed, i.e. G.T.
Capital as the Fund's investment manager actively purchases and sells securities
in seeking the Fund's investment objective; this will cause the performance of
the Fund to differ from the indices shown above.
Statement of Additional Information Page 45
<PAGE>
G.T. GLOBAL EMERGING MARKETS FUND
DESCRIPTION OF DEBT RATINGS
- --------------------------------------------------------------------------------
DESCRIPTION OF COMMERCIAL PAPER RATINGS
MOODY'S INVESTORS SERVICE, INC. ("Moody's") employs the designations "Prime-1"
"Prime-2" and "Prime-3" to indicate commercial paper having the highest capacity
for timely repayment. Issuers rated Prime-1 have a superior capacity for
repayment of short-term promissory obligations. Prime-1 repayment capacity will
normally be evidenced by the following characteristics: leading market positions
in well-established industries; high rates of return on funds employed;
conservative capitalization structures with moderate reliance on debt and ample
asset protections; broad margins in earnings coverage of fixed financial charges
and high internal cash generation; and well-established access to a range of
financial markets and assured sources of alternate liquidity. Issues rated
Prime-2 have a strong capacity for repayment of short-term promissory
obligations. This will normally be evidenced by many of the characteristics
cited above, but to a lesser degree. Earnings trends and coverage ratios, while
sound, will be more subject to variation. Capitalization characteristics, while
still appropriate, may be more affected by external conditions. Ample alternate
liquidity is maintained. Issuers rated Prime-3 have an acceptable ability for
repayment of senior short-term promissory obligations. The effect of industry
characteristics and market composition may be more pronounced. Variability in
earnings and profitability may result in changes in the level of debt protection
measurements and may require relatively high financial leverage. Adequate
alternate liquidity is maintained.
STANDARD & POOR'S RATINGS GROUP ("S & P") ratings of commercial paper are graded
into four categories ranging from "A" for the highest quality obligations to "D"
for the lowest. A -- Issues assigned its highest rating are regarded as having
the greatest capacity for timely payment. Issues in this category are delineated
with numbers 1, 2, and 3 to indicate the relative degree of safety. A-1 -- This
designation indicates that the degree of safety regarding timely payment is
either overwhelming or very strong. Those issues determined to possess
overwhelming safety characteristics will be denoted with a plus (++) sign
designation. A-2 -- Capacity for timely payments on issues with this designation
is strong. However, the relative degree of safety is not as high as for issues
designated "A-1." A-3 -- issues carrying this designation have a satisfactory
capacity for timely payment. They are, however, somewhat more vulnerable to the
adverse effects of changes in circumstances than obligations carrying the higher
designations.
DESCRIPTION OF BOND RATINGS
Moody's rates the long-term debt securities issued by various entities from
"Aaa" to "C." Investment grade ratings are as follows:
Aaa -- Best quality. These securities carry the smallest degree of
investment risk and are generally referred to as "gilt edge." Interest
payments are protected by a large, or by an exceptionally stable margin and
principal is secure. While the various protective elements are likely to
change, such changes as can be visualized are most unlikely to impair the
fundamentally strong position of such issues.
Aa -- High quality by all standards. They are rated lower than the best
bond because margins of protection may not be as large as in Aaa securities,
fluctuation of protective elements may be of greater amplitude, or there may
be other elements present which make the long-term risks appear somewhat
greater.
A -- Upper medium grade obligations. These bonds possess many favorable
investment attributes. Factors giving security to principal and interest are
considered adequate, but elements may be present which suggest a
susceptibility to impairment sometime in the future.
Baa -- Medium grade obligations. Interest payments and principal
security appear adequate for the present but certain protective elements may
be lacking or may be characteristically unreliable over any great length of
time. Such bonds lack outstanding investment characteristics and, in fact,
have speculative characteristics as well.
Speculative grade ratings are as follows:
Ba -- These Bonds are judged to have speculative elements; their future
cannot be considered as well assured. Often the protection of interest and
principal payments may be very moderate and thereby not well safeguarded
during other good and bad times over the future. Uncertainty of position
characterizes bonds in this class.
Statement of Additional Information Page 46
<PAGE>
G.T. GLOBAL EMERGING MARKETS FUND
B -- These bonds generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance
of other terms of the contract over any long period of time may be small.
Caa -- These bonds are of poor standing. Such issues may be in default
or there may be present elements of danger with respect to principal or
interest.
Ca -- These bonds represent obligations which are speculative in a high
degree. Such issues are often in default or have other marked shortcomings.
C -- These bonds are the lowest rated class of bonds and issues so rated
can be regarded as having extremely poor prospects of ever attaining any
real investment standing.
S&P rates the long-term securities debt of various entities in categories
ranging from "AAA" to "D" according to quality. Investment grade ratings are as
follows:
AAA -- Highest rating. Capacity to pay interest and repay principal is
extremely strong.
AA -- High grade. Very strong capacity to pay interest and repay
principal. Generally, these bonds differ from AAA issues only in a small
degree.
A -- Have a strong capacity to pay interest and repay principal,
although they are somewhat more susceptible to the adverse effects of change
in circumstances and economic conditions, than debt in higher rated
categories.
BBB -- Regarded as having adequate capacity to pay interest and repay
principal. These bonds normally exhibit adequate protection parameters, but
adverse economic conditions or changing circumstances are more likely to
lead to a weakened capacity to pay interest and repay principal than for
debt in higher rated categories.
Speculative grade ratings are as follows:
BB -- Have less near-term vulnerability to default than other
speculative issues. However, these bonds face major ongoing uncertainties or
exposure to adverse business, financial, or economic conditions which could
lead to inadequate capacity to meet timely interest and principal payments.
This rating category is also used for debt subordinated to senior debt that
is assigned an actual or implied 'BBB-'rating.
B -- Have greater vulnerability to default but currently have the
capacity to meet interest payments and principal repayments. Adverse
business, financial, or economic conditions will likely impair capacity or
willingness to pay interest and repay principal. This rating category is
also used for debt subordinated to senior debt that is assigned an actual or
implied 'BB' or 'BB-' rating.
CCC -- Have currently identifiable vulnerability to default and are
dependent upon favorable business, financial, and economic conditions to
meet timely payment of interest and repayment of principal. In the event of
adverse business, financial, or economic conditions, these bonds are not
likely to have the capacity to pay interest and repay principal. The 'CCC'
rating category is also used for debt subordinated to senior debt that is
assigned an actual or implied 'B' or 'B-' rating.
CC -- This rating typically is applied to debt subordinated to senior
debt that is assigned an actual or implied 'CCC' rating.
C -- This rating typically is applied to debt subordinated to senior
debt that is assigned an actual or implied 'CCC-' debt rating. This rating
may be used to cover a situation where a bankruptcy petition has been filed,
but debt service payments are continued.
CI -- This rating is reserved for income bonds on which no interest is
being paid.
D -- Are in payment default. This rating category is used when interest
payments or principal payments are not made on the date due even if the
applicable grace period has not expired, unless S&P believes that such
payments will be made during such grace period. This rating also will be
used up on filing of a bankruptcy petition if debt service payments are
jeopardized.
Statement of Additional Information Page 47
<PAGE>
G.T. GLOBAL EMERGING MARKETS FUND
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
The audited financial statements of the G.T. Global Emerging Markets Fund at
October 31, 1994 and for the period then ended appear on the following pages.
Statement of Additional Information Page 48
<PAGE>
G.T. GLOBAL EMERGING MARKETS FUND
REPORT OF
INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
ANNUAL REPORT
To the Shareholders and Board of Directors of
G.T. Investment Funds, Inc.:
We have audited the accompanying statement of
assets and liabilities of G.T. Global Emerging Markets Fund, one of the funds
organized as a series of G.T. Investment Funds, Inc., including the schedule of
portfolio investments, as of October 31, 1994, and the related statement of
operations for the year then ended, the statements of changes in net assets for
each of the two years in the period then ended, and the financial highlights for
each of the two years in the period then ended and for the period from May 18,
1992 (commencement of operations) to October 31, 1992. These financial
statements and the financial highlights are the responsibility of the Fund's
management. Our responsibility is to express an opinion on these financial
statements and the financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and the financial
highlights are free of material misstatement. An audit includes examining,
on a test basis, evidence supporting the amounts and disclosures in the
financial statements. Our procedures included confirmation of securities owned
as of October 31, 1994 by correspondence with the
custodian and brokers. An audit also includes
assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and the financial highlights referred
to above present fairly, in all material respects, the financial position of
G.T. Global Emerging Markets Fund as of October 31, 1994, the results of its
operations for the year then ended, the changes in its net assets for each of
the two years in the period then ended and the financial highlights for each of
the two years in the period then ended and for the period from May 18, 1992
(commencement of operations) to October 31, 1992, in conformity with generally
accepted accounting principles.
COOPERS & LYBRAND L.L.P.
BOSTON, MASSACHUSETTS
DECEMBER 16, 1994
Statement of Additional Information Page 49
<PAGE>
G.T. GLOBAL EMERGING MARKETS FUND
PORTFOLIO OF INVESTMENTS
October 31, 1994
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Equity Market % of Net
Investments Country Shares Value Assets(a)
<S> <C> <C> <C> <C>
- ----------------------------------------------------------------------------
Materials/Basic Industries (15.8%)
- -----------------------------------------------
Chemicals (2.5%)
- -----------------------------------------------
TPI Polene Company
Ltd. (Foreign) THAI 994,600 $10,776,164 1.6
Miwon Petro-
chemical Co.: KOR -- -- 0.6
Common -- 140,680 2,977,355 --
New (c) -- 51,342 1,086,603 --
Fauji Fertilizer
Co. Ltd. PAK 475,000 1,537,770 0.2
Korea Chemical
Company Ltd. KOR 3,500 593,717 0.1
Lucky Company Ltd.: KOR -- -- --
Common -- 4,494 170,809 --
New -- 264 9,733 --
Engro Chemical (c) PAK 16,260 140,906 --
Forest Products (1.5%)
- -----------------------------------------------
Sappi Limited S AFR 500,000 8,416,459 1.2
PT Barito Pacific
Timber (Foreign) INDO 820,000 1,396,869 0.2
Aracruz Celulose
S.A. ADR (b)(c) BRZL 50,000 637,500 0.1
Gold (1.0%)
- -----------------------------------------------
Ashanti Goldfields
144A GDR (b)(c)(d) S AFR 185,000 3,959,000 0.6
Kloof Gold Mining S AFR 150,000 2,562,344 0.4
Metals - Non-Ferrous (2.0%)
- -----------------------------------------------
Companhia Vale do
Rio Doce - CVRD
(Preferred) BRZL 43,600,000 9,453,555 1.3
General Mining
Union Corpo-
ration (Gencor) S AFR 765,000 2,813,903 0.4
Paranapanema S.A.
(Preferred) (c) BRZL 146,600,000 2,398,751 0.3
Metals - Steel (4.4%)
- -----------------------------------------------
SA Iron & Steel
Industrial Corp.
Ltd. - ISCOR S AFR 12,540,097 14,635,324 2.1
<CAPTION>
Equity Market % of Net
Investments Country Shares Value Assets(a)
<S> <C> <C> <C> <C>
- ----------------------------------------------------------------------------
Compania
Siderurgica de
Tubar S.A. "B"
144A ADR (b)(d)(c) BRZL 217,000 $7,866,250 1.1
Pohang Iron & Steel
Company Ltd. KOR 36,220 4,306,201 0.6
Korea Iron & Steel
Company: (c) KOR -- -- 0.4
Common -- 60,190 1,781,891 --
New -- 21,380 613,955 --
Pusan Steel Pipe
Corporation KOR 32,888 1,441,802 0.2
Paper/Packaging (1.1%)
- -----------------------------------------------
Siam Pulp & Pulp
(Foreign) THAI 873,000 3,082,825 0.4
Kimberly-Clark de
Mexico, S.A. de
C.V. "A" MEX 132,000 2,623,076 0.4
PT Indah Kiat Pulp
& Paper (Foreign) INDO 1,860,000 2,205,111 0.3
Packages Ltd. PAK 21,500 126,553 --
Cement (3.3%)
- -----------------------------------------------
Cementos Mexicanos,
S.A. de C.V. -
Cemex: MEX -- -- 1.1
"B" -- 796,125 7,399,880 --
"A" -- 40,837 365,891 --
Siam Cement Co.
Ltd. (Foreign) THAI 78,600 4,535,586 0.6
Chosun Refractories
Co.: KOR -- -- 0.4
Common -- 52,420 2,212,232 --
New (c) -- 13,623 563,764 --
Dandot Cement Co.
Ltd. (c) PAK 563,080 2,669,935 0.4
PT Indocement
Tunggal (Foreign) INDO 580,000 2,189,687 0.3
PT Semen Cibinong
(Foreign) INDO 524,600 1,859,770 0.3
Cherat Cement (c) PAK 210,908 827,631 0.1
Cementos Norte
Pacasmayo S.A. (c) PERU 139,151 564,126 0.1
--------------
110,802,928
--------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 50
<PAGE>
G.T. GLOBAL EMERGING MARKETS FUND
<TABLE>
<CAPTION>
Equity Market % of Net
Investments Country Shares Value Assets(a)
- ----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Banking (14.0%)
- -----------------------------------------------
Banks - Money Center (1.6%)
- -----------------------------------------------
Development &
Commercial Bank
Bhd. MAL 1,738,000 $4,796,594 0.7
United Overseas
Bank Ltd.
(Foreign) SING 230,000 2,522,480 0.4
Akbank T.A.S. TRKY 8,000,000 2,286,033 0.3
Malayan Banking
Berhad MAL 250,000 1,702,877 0.2
Banks - Regional (12.4%)
- -----------------------------------------------
The Thai Farmers
Bank, Ltd.
(Foreign) THAI 1,327,600 11,720,385 1.7
Grupo Financiero
Banamex Accival,
S.A. de C.V -
Banacci.: MEX -- -- 1.3
"B" -- 1,152,000 7,048,951 --
"C" -- 324,000 2,227,972 --
"L" -- 42,100 279,685 --
Siam Commercial
Bank Public Co.
Ltd. (Foreign) THAI 700,700 7,254,438 1.0
Banco do Brasil
S.A. (Preferred) BRZL 356,630,000 7,183,306 1.0
Cho Hung Bank KOR 302,489 5,574,974 0.8
Uniao Bancos
Brasileiros -
Unibanco
(Preferred "A") BRZL 165,720,000 5,242,564 0.7
Banco Nacional S.A.
(Preferred) BRZL 185,011,200 5,037,390 0.7
Banco Ganadero
S.A.: COL -- -- 0.7
144A ADR (b)(d) -- 150,000 4,200,000 --
Common -- 2,394,122 785,839 --
Grupo Financiero
Bancomer, S.A. de
C.V. "C" MEX 4,202,000 4,872,949 0.7
Banco de Credito PERU 2,022,838 4,811,074 0.7
Bank of Seoul: KOR -- -- 0.6
Common -- 369,000 3,737,415 --
New (c) -- 77,722 787,207 --
Grupo Financiero
Serfin S.A. de
C.V.: MEX -- -- 0.5
ADR (b) -- 125,000 2,218,750 --
"B" -- 280,000 1,207,459 --
Philippines
National Bank PHIL 210,000 3,302,419 0.5
Chung Chong Bank KOR 135,000 1,751,701 0.2
State Bank of India
Limited (c) IND 214,700 1,276,345 0.2
Korea First Bank KOR 60,000 1,214,966 0.2
<CAPTION>
Equity Market % of Net
Investments Country Shares Value Assets(a)
<S> <C> <C> <C> <C>
- ----------------------------------------------------------------------------
Shinhan Bank KOR 30,000 $1,106,652 0.2
Turkiye Garanti
Bankasi A.S. TRKY 4,197,000 994,550 0.1
Banco Itau S.A.
(Preferred) BRZL 2,970,000 953,637 0.1
PT Bank Bali
(Foreign) INDO 248,500 675,023 0.1
Ionian Bank GREC 34,544 670,736 0.1
Banco Bradesco de
Investimento S.A.
(Preferred) BRZL 58,592,750 548,439 0.1
Korea Long Term
Credit Bank: KOR -- -- 0.1
Common -- 15,000 529,101 --
New (c) -- 2,818 96,418 --
Boram Bank: KOR -- -- 0.1
Preferred -- 43,000 418,191 --
Preferred
New (c) -- 10,220 96,411 --
--------------
99,132,931
--------------
Services (12.3%)
- -----------------------------------------------
Grupo Televisa,
S.A. de C.V. GDR
(b) MEX 436,500 19,369,679 2.7
BROADCASTING & PUBLISHING
Telecomunicacoes
Brasileiras S.A. -
Telebras: BRZL -- -- 2.5
TELEPHONE NETWORKS
Sponsored ADR (b) -- 214,189 10,281,072 --
Preferred -- 146,528,300 7,065,997 --
Preferred New (c) -- 3,340,409 144,975 --
Telefonos de
Mexico, S.A. de
C.V.: MEX -- -- 2.0
TELEPHONE NETWORKS
"L" ADR (b) -- 232,200 12,771,000 --
"L" -- 400,000 1,116,550 --
Pakistan
Telecommunica-
tions Company Ltd.
Vouchers 144A
(b)(d)(c) PAK 72,953 12,073,722 1.7
TELEPHONE NETWORKS
Philippine Long
Distance Tele-
phone Company ADR
(b) PHIL 96,100 5,477,700 0.8
TELEPHONE-LONG DISTANCE
Lucky - Goldstar
International
Corporation KOR 155,000 2,889,897 0.4
WHOLESALE & INTERNATIONAL TRADE
Mesbla S.A.
(Preferred) BRZL 14,885,000 2,874,710 0.4
RETAILERS-OTHER
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 51
<PAGE>
G.T. GLOBAL EMERGING MARKETS FUND
<TABLE>
<CAPTION>
Equity Market % of Net
Investments Country Shares Value Assets(a)
- ----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Compania Peruana de
Telefonos "B" PERU 1,882,162 $2,619,766 0.4
TELEPHONE NETWORKS
Grupo Situr, S.A.
de C.V. "B" MEX 840,000 2,545,455 0.4
LEISURE & TOURISM
Keppel Corporation
Ltd. SING 235,000 2,161,104 0.3
TRANSPORTATION-SHIPPING
Daewoo Corporation KOR 89,000 1,887,746 0.3
WHOLESALE & INTERNATIONAL TRADE
PT Indonesia
Satellite (Indo-
sat) ADR (b) INDO 26,500 1,040,125 0.1
TELEPHONE NETWORKS
Compania de
Telefonos de Chile
ADR (b) CHLE 10,300 969,488 0.1
TELEPHONE NETWORKS
Gran Cadena de
Almacenes
Colombianos COL 460,000 879,121 0.1
RETAILERS-OTHER
Dusit Thani
Corporation, Ltd.
(Foreign) THAI 389,620 469,045 0.1
LEISURE & TOURISM
Indian Hotels IND 3,000 54,580 --
LEISURE & TOURISM
--------------
86,691,732
--------------
Consumer Non-Durables (7.3%)
- -----------------------------------------------
Panamerican
Beverages, Inc.
"A" (b) MEX 419,400 14,416,875 2.0
BEVERAGES-NON ALCOHOLIC
Coteminas S.A.
(Preferred) BRZL 27,440,000 11,703,940 1.7
TEXTILES & APPAREL
South African
Breweries Ltd. S AFR 325,000 7,618,454 1.1
BEVERAGES-ALCOHOLIC
San Miguel
Corporation "B" PHIL 800,000 4,354,839 0.6
BEVERAGES-ALCOHOLIC
Cia. Souza Cruz
Industria E
Comercio S.A. BRZL 379,426 3,596,455 0.5
TOBACCO
Dhan Fibres Ltd.
(c) PAK 6,114,000 2,899,052 0.4
TEXTILES & APPAREL
PT Indo-Rama
Synthetics
(Foreign) INDO 446,000 1,786,464 0.3
TEXTILES & APPAREL
Hellenic Bottling
Co., S.A. GREC 53,370 1,657,582 0.2
BEVERAGES-NON ALCOHOLIC
<CAPTION>
Equity Market % of Net
Investments Country Shares Value Assets(a)
<S> <C> <C> <C> <C>
- ----------------------------------------------------------------------------
Mahavir Spinning
(Rights) IND 67,858 $1,407,842 0.2
TEXTILES & APPAREL
Dewan Salman Fibre
Ltd. (c) PAK 200,000 1,111,838 0.2
TEXTILES & APPAREL
Nishat Mills Ltd.
(c) PAK 189,750 493,300 0.1
TEXTILES & APPAREL
PT Gudang Garam
(Foreign) INDO 50,000 329,190 --
TOBACCO
--------------
51,375,831
--------------
Energy (7.0%)
- -----------------------------------------------
Centrais Electricas
Brasileiras S.A. -
Electrobras: BRZL -- -- 2.1
ELECTRICAL & GAS UTILITIES
Preferred B -- 34,699,900 13,279,701 --
Common -- 2,099,900 818,563 --
Preferred B New
(c) -- 1,900,244 727,226 --
Common New (c) -- 72,949 28,436 --
Bolivian Power (b) BOL 291,700 7,073,725 1.0
ELECTRICAL & GAS UTILITIES
Sasol Ltd. S AFR 754,100 6,675,948 0.9
ENERGY SOURCES
Manila Electric
Company (Meralco)
"B" PHIL 469,340 6,623,750 0.9
ELECTRICAL & GAS UTILITIES
C.A. La
Electricidad de
Caracas VENZ 2,778,317 5,425,890 0.8
ELECTRICAL & GAS UTILITIES
Yukong Ltd.: KOR -- -- 0.5
ENERGY EQUIPMENT & SERVICES
Common -- 51,729 3,402,462 --
New (c) -- 3,113 177,258 --
Electricidad de
Argentina 144A ADR
(b)(d) ARG 100,000 1,825,000 0.3
ELECTRICAL & GAS UTILITIES
Shandong Huaneng
Power Development
Company Ltd. ADR
(b) HK 161,200 1,732,900 0.2
ELECTRICAL & GAS UTILITIES
Madras Refineries
Limited IND 199,500 875,559 0.1
GAS PRODUCTION & DISTRIBUTION
Pakistan State Oil PAK 60,000 867,233 0.1
OIL
Dragon Oil PLC UK 24,000,000 686,948 0.1
OIL
--------------
50,220,599
--------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 52
<PAGE>
G.T. GLOBAL EMERGING MARKETS FUND
<TABLE>
<CAPTION>
Equity Market % of Net
Investments Country Shares Value Assets(a)
- ----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Miscellaneous/Conglomerate (6.6%)
- -----------------------------------------------
Grupo Carso, S.A.
de C.V. "A1": MEX -- -- 1.8
CONGLOMERATE
Common -- 1,130,000 $12,034,237 --
144A ADR (b)(d) -- 24,600 522,750 --
Malbak Limited S AFR 1,600,000 7,481,297 1.1
CONGLOMERATE
Straits Steamship
Land Ltd. SING 1,966,000 7,030,995 1.0
CONGLOMERATE
BPL Limited IND 624,200 4,582,381 0.6
MISCELLANEOUS
Commercial Del
Plata ARG 1,226,080 4,135,612 0.6
CONGLOMERATE
Desc Sociedad de
Fomento
Industrial, S.A.
de C.V. "B" MEX 419,000 3,100,991 0.4
CONGLOMERATE
KEC International IND 321,000 2,868,816 0.4
MISCELLANEOUS
PT Putra Surya
Perkasa (Foreign) INDO 1,303,500 1,935,445 0.3
MISCELLANEOUS
Grasim Industries
Limited 144A GDR
(b)(d) IND 70,000 1,706,250 0.2
CONGLOMERATE
Nicholas Piramel
India Ltd. IND 80,000 1,404,405 0.2
MISCELLANEOUS
--------------
46,803,179
--------------
Capital Goods (5.9%)
- -----------------------------------------------
Hindalco Industries
Ltd. 144A GDR
(b)(d) IND 210,000 7,350,000 1.0
INDUSTRIAL COMPONENTS
Empresas ICA
Sociedad
Controladora S.A.
de C.V. ADR (b) MEX 236,500 7,006,313 1.0
CONSTRUCTION
Uniphone
Telecommunica-
tions Bhd. MAL 2,037,500 4,985,076 0.7
TELECOM EQUIPMENT
Leader Universal
Holdings Bhd. MAL 749,000 4,163,554 0.6
INDUSTRIAL COMPONENTS
PT United Tractors
(Local) INDO 1,178,000 3,037,201 0.4
MACHINERY & ENGINEERING
Gujarat Telephone
Cable IND 1,050,000 2,597,351 0.4
TELECOM EQUIPMENT
<CAPTION>
Equity Market % of Net
Investments Country Shares Value Assets(a)
<S> <C> <C> <C> <C>
- ----------------------------------------------------------------------------
Netas Telekomunik TRKY -- -- 0.4
TELECOM EQUIPMENT
New (c) -- 4,001,400 $1,422,299 --
Common -- 3,201,120 1,137,839 --
Samsung
Construction
Company KOR 41,410 1,885,204 0.3
CONSTRUCTION
Taihan Electric
Wire Company KOR 38,421 1,239,075 0.2
INDUSTRIAL COMPONENTS
Dong-Ah
Construction
Industrial Company KOR 23,874 1,016,164 0.1
CONSTRUCTION
PT Supreme Cable
Manufac-
turing (Foreign) INDO 302,500 1,009,726 0.1
INDUSTRIAL COMPONENTS
Kukdong
Construction
Company KOR 53,930 991,910 0.1
CONSTRUCTION
Hyundai Precision
Industry Company KOR 25,698 783,436 0.1
MACHINERY & ENGINEERING
Kun Young
Construction Corp. KOR 36,000 761,905 0.1
CONSTRUCTION
Samsung Engineering
& Contruction New
(c) KOR 15,931 703,506 0.1
MACHINERY & ENGINEERING
Keppel Philippines
Holdings "B" PHIL 841,510 644,705 0.1
MACHINERY & ENGINEERING
Grupo Mexicano de
Desarrollo, S.A.
"L" ADR (b) MEX 31,810 644,153 0.1
CONSTRUCTION
Lucky Develop-
ment Company KOR -- -- 0.1
CONSTRUCTION
Common -- 25,000 579,491 --
New (c) -- 4,376 98,391 --
Kepphil Shipyard
Inc. PHIL 205,000 28,105 --
MACHINERY & ENGINEERING
--------------
42,085,404
--------------
Consumer Durables (4.5%)
- -----------------------------------------------
Samsung Electronics
Co. KOR -- -- 2.8
CONSUMER ELECTRONICS
Common -- 100,411 19,468,198 --
New (c) -- 3,778 732,498 --
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 53
<PAGE>
G.T. GLOBAL EMERGING MARKETS FUND
<TABLE>
<CAPTION>
Equity Market % of Net
Investments Country Shares Value Assets(a)
- ----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Brasmotor S.A.
(Preferred) BRZL 11,340,000 $4,702,607 0.7
APPLIANCES & HOUSEHOLD DURABLE
Tofas Turk Otomobil
Fabrikasi 144A GDR
(b)(d) TRKY 861,180 3,173,448 0.4
AUTOMOBILES
Consorcio Grupo
Dina, S.A. de C.V.
ADR (b) MEX 133,700 1,721,388 0.2
AUTOMOBILES
Mando Machinery
Corporation KOR 20,000 1,493,575 0.2
AUTO PARTS
Daewoo Electronics
Company KOR 79,264 1,318,071 0.2
CONSUMER ELECTRONICS
Ciadea S.A. ARG 45 628 --
AUTOMOBILES
--------------
32,610,413
--------------
Finance (4.0%)
- -----------------------------------------------
City Developments
Ltd. SING 2,310,000 13,611,376 1.9
REAL ESTATE
Singapore Land Ltd. SING 438,000 2,819,550 0.4
REAL ESTATE
National Finance &
Securities Public
Co. (Foreign) THAI 411,000 2,407,945 0.3
SECURITIES BROKER
Hong Leong Finance
Bhd. (Foreign) MAL 630,000 2,403,270 0.3
OTHER FINANCIAL
Phatra Thanakit Co.
Ltd. (Foreign) THAI 228,800 2,350,434 0.3
INVESTMENT MANAGEMENT
Housing Development
Finance Corp. IND 24,320 2,134,695 0.3
OTHER FINANCIAL
PT Lippo Land
Development
(Foreign) INDO 618,250 1,053,188 0.1
REAL ESTATE
Boo Kook Securities
Co. (Preferred) KOR 58,140 878,912 0.1
SECURITIES BROKER
Tube Investment
Ltd. IND 105,000 854,612 0.1
OTHER FINANCIAL
Yu Hwa Security Co.
(Preferred) KOR 61,870 795,004 0.1
SECURITIES BROKER
<CAPTION>
Equity Market % of Net
Investments Country Shares Value Assets(a)
<S> <C> <C> <C> <C>
- ----------------------------------------------------------------------------
Lucky Securities
Company KOR 15,300 $481,204 0.1
SECURITIES BROKER
--------------
29,790,190
--------------
Health Care (0.8%)
- -----------------------------------------------
Ranbaxy
Laboratories Ltd. IND 225,200 4,708,139 0.7
MEDICAL TECHNOLOGY & SUPPLIES
Core Parenterals
(c) IND 29,400 365,975 0.1
PHARMACEUTICALS
--------------
5,074,114
--------------
Telecom Technology (0.3%)
- -----------------------------------------------
Himachal Telematics
Ltd. (c) IND 750,000 2,154,485 0.3
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
Total Equity Investments
(cost $454,369,105)........................... 556,741,806 78.5
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
<CAPTION>
Fixed Income Principal
Investments Currency Amount
<S> <C> <C> <C> <C>
- ----------------------------------------------------------------------------
Government & Government Agency Obligations
(2.5%)
- -----------------------------------------------
Argentina (0.8%)
- -----------------------------------------------
Republic of
Argentina, FRB
Bond, 6.5% due
3/31/05 (f) USD 7,500,000 5,442,188 0.8
Philippines (0%)
- -----------------------------------------------
Republic of the
Philippines, Par
Bond Series B,
5.25% due 12/1/17
(g) USD 250,000 154,688 --
South Africa (0.7%)
- -----------------------------------------------
Republic of South
Africa, 11.5% due
5/30/00 ZAL 23,000,000 4,703,815 0.7
Venezuela (1.0%)
- -----------------------------------------------
Republic of
Venezuela, USD -- -- 1.0
Debt Conver-
sion Bond, 5.75%
due 12/18/07 (f) -- 10,000,000 4,837,500 --
Par Bond Series
A, 6.75% due
3/31/20 (e) -- 5,000,000 2,381,250 --
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
Total Government & Government Agency
Obligations
(cost $19,317,336)............................ 17,519,441 2.5
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 54
<PAGE>
G.T. GLOBAL EMERGING MARKETS FUND
<TABLE>
<CAPTION>
Fixed Income Principal Market % of Net
Investments Currency Amount Value Assets(a)
- ----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Corporate Bonds (1.0%)
- -----------------------------------------------
India (0.6%)
- -----------------------------------------------
Global Mark
International
Ltd., 3.5% due
2/9/95 144A (d) USD 3,000,000 $3,300,000 0.5
Gujarat Tele-
phone Cable, 18%
due 8/5/99 INR 550,000 526,652 0.1
Korea (0.4%)
- -----------------------------------------------
Korea Development
Bank, 6.75% due
12/1/05 USD 3,000,000 2,536,500 0.4
Nigeria (0%)
- -----------------------------------------------
Central Bank of
Nigeria, Par Bond,
5.5% due 11/15/20
(g)(e) USD 500,000 195,313 --
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
Total Corporate Bonds
(cost $6,620,036)............................. 6,558,465 1.0
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
Purchased Bank Debt (0.2%)
- -----------------------------------------------
Kingdom of Morocco,
Tranche A Loan
Agreement due
1/1/09 (cost
$1,077,060) USD 2,000,000 1,423,750 0.2
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
Total Fixed Income Investments
(cost $27,014,432)............................ 25,501,656 3.7
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
<CAPTION>
Rights (3.7%) Country Shares
<S> <C> <C> <C> <C>
- -----------------------------------------------
Phatra Thanakit Co.
Ltd. (Foreign)
Rights expire
11/3/94 (c) THAI 1,703,200 16,813,291 2.4
INVESTMENT MANAGEMENT
National Finance &
Securities
(Foreign) Rights
expire 1/11/95 (c) THAI 1,233,000 5,986,878 0.8
SECURITIES BROKER
TPI Polene Company
Ltd. (Foreign)
Rights expire
11/15/94 (c) THAI 290,025 3,025,943 0.4
CHEMICALS
<CAPTION>
Market % of Net
Rights Country Shares Value Assets(a)
<S> <C> <C> <C> <C>
- ----------------------------------------------------------------------------
PT Lippo Land
Development
(Foreign) Rights
expire 11/14/94
(c) INDO 1,236,250 $683,011 0.1
REAL ESTATE
Dragon Oil PLC
Right expire
11/4/94 (c) UK 923,077 3,774 --
OIL
Kun Young Con-
struction Corp.
Rights expire
11/4/94 (c) KOR 8,388 0 --
CONSTRUCTION
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
Total Rights
(cost $13,430,700)............................ 26,512,897 3.7
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
Warrants (0.1%)
- -----------------------------------------------
Tata Engineering &
Locomotive Co.
Ltd. Wts expire
8/3/96 (c) (cost
$416,003) IND 142,500 695,400 0.1
AUTOMOBILES
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
<CAPTION>
Short-Term Investments
- --------------------------------
<S> <C> <C> <C> <C>
Repurchase Agreement (8.2%)
- -----------------------------------------------
Dated October 31, 1994 with State Street Bank &
Trust Company, due November 1, 1994, for an
effective yield of 4.7% collateralized by
$27,980,000 Federal Home Loan Mortgage
Corporation Note, 8% due 1/1/23.(Market value
$27,187,233, including accrued interest.)
(cost $27,003,525)............................
27,003,525 3.8
Dated October 31, 1994 with State Street Bank &
Trust Company, due November 1, 1994, for an
effective yield of 4.7% collateralized by
$22,450,000 First of America Mortgage Company
Note, 5.576% due 10/1/22.(Market value
$22,105,318, including accrued interest.)
(cost $22,002,872)............................
22,002,872 3.1
Dated October 31, 1994 with State Street Bank &
Trust Company, due November 1, 1994, for an
effective yield of 4.7% collateralized by
$9,085,000 Federal National
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 55
<PAGE>
G.T. GLOBAL EMERGING MARKETS FUND
<TABLE>
<CAPTION>
Market % of Net
Short-Term Investments Value Assets(a)
- ----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Mortgage Association Note, 5.4% due
10/25/02.(Market value $8,944,183, including
accrued interest.) (cost $8,900,162)..........
$8,900,162 1.3
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
Total Short-Term Investments (cost
$57,906,559).................................. 57,906,559 8.2
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
Total Investments
(cost $555,021,876)*.......................... 667,358,318 94.2
Other Assets Less Liabilities.................. 41,252,751 5.8
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
Net Assets..................................... $708,611,069 100.0
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
<FN>
- --------------------------------------------------------------------------------
(a) Percentages indicated are based on net assets of $708,611,069.
(b) U.S. currency denominated.
(c) Non-income producing security.
(d) Security exempt from registration under Rule 144A of the Securities Act of
1933.These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers.
(e) Issued with detachable warrants or value recovery rights.The current market
value of each warrant or right is zero.
(f) The coupon rate shown on floating rate note represents the rate at period
end.
(g) The coupon rate shown on step-up coupon bond represents the rate at period
end.
Abbreviations:
ADR -- American Depository Receipt
GDR -- Global Depository Receipt
Wts -- Warrants
* For Federal income tax purposes, cost is $555,613,305 and appreciation
(depreciation) of securities is as follows:
Unrealized appreciation: $ 136,993,872
Unrealized depreciation: (25,248,859)
-------------
Net unrealized
appreciation: $ 111,745,013
-------------
-------------
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
The Fund's Portfolio of Investments at October 31, 1994, was concentrated in the
following countries:
<TABLE>
<CAPTION>
Percentage of Net Assets(a)
--------------------------------------------------------------------------
Fixed Rights &
Country Equity Income Warrants Short- Term Other Total
- -------------------------- ----------- ----------- ----------- ----------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
Argentina................. 0.9 0.8 1.7
Bolivia................... 1.0 1.0
Brazil.................... 13.3 13.3
Chile..................... 0.1 0.1
Colombia.................. 0.8 0.8
Greece.................... 0.3 0.3
Hong Kong................. 0.2 0.2
India..................... 4.8 0.6 0.1 5.5
Indonesia................. 2.5 0.1 2.6
Korea..................... 10.3 0.4 10.7
Malaysia.................. 2.5 2.5
Mexico.................... 14.6 14.6
Morocco................... 0.2 0.2
Pakistan.................. 3.2 3.2
Peru...................... 1.2 1.2
Philippines............... 2.9 2.9
South Africa.............. 7.8 0.7 8.5
Singapore................. 4.0 4.0
Thailand.................. 6.0 3.6 9.6
Turkey.................... 1.2 1.2
UK........................ 0.1 0.1
U.S....................... 8.2 5.8 14.0
Venezuela................. 0.8 1.0 1.8
--- --- --- --- --- ---------
Total..................... 78.5 3.7 3.8 8.2 5.8 100.0
--- --- --- --- --- ---------
--- --- --- --- --- ---------
<FN>
- ----------------
(a) Percentages indicated are based on net assets of $708,611,069.
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 56
<PAGE>
G.T. GLOBAL EMERGING MARKETS FUND
STATEMENT OF ASSETS
AND LIABILITIES
October 31, 1994
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Assets:
<S> <C> <C>
Investments in securities, at value (cost $555,021,876) (Note 1).................................... $ 667,358,318
U.S. currency..........................................................................
$ 150
Foreign currency (cost $12,411,264)....................................................
12,312,922 12,313,072
-----------
Receivable for securities sold...................................................................... 22,957,730
Receivable for Fund shares sold..................................................................... 9,331,103
Dividends and dividend withholding tax reclaims receivable.......................................... 759,138
Interest receivable................................................................................. 755,992
Prepaid assets...................................................................................... 76,394
Cash held as collateral for securities loaned (Note 1).............................................. 16,637,500
-------------
Total assets........................................................................................ 730,189,247
-------------
Liabilities:
Payable for securities purchased.................................................................... 2,442,543
Payable for Fund shares repurchased................................................................. 1,205,551
Payable for investment management and administration fees (Note 2).................................. 570,798
Payable for service and distribution expenses (Note 2).............................................. 409,967
Payable for transfer agent fees (Note 2)............................................................ 159,352
Payable for professional fees....................................................................... 55,249
Payable for custodian fees (Note 1)................................................................. 31,429
Payable for registration fees....................................................................... 31,362
Payable for printing and postage expenses........................................................... 14,027
Payable for Directors' fees (Note 2)................................................................ 2,835
Accrued expenses.................................................................................... 17,565
Collateral for securities loaned (Note 1)........................................................... 16,637,500
-------------
Total liabilities................................................................................... 21,578,178
-------------
Net assets............................................................................................ $ 708,611,069
-------------
-------------
Class A:
Net asset value and redemption price per share
($417,321,830 DIVIDED BY 22,186,966 shares outstanding)............................................. $ 18.81
-------------
-------------
Maximum offering price per share
(100/95.25 of $18.81)*............................................................................... $ 19.75
-------------
-------------
Class B:+
Net asset value and offering price per share
($291,289,239 DIVIDED BY 15,593,963 shares outstanding)............................................. $ 18.68
-------------
-------------
Net assets consist of:
Paid in capital (Note 4)............................................................................ $ 569,916,241
Accumulated net realized gain on investments and foreign currency conversions....................... 26,390,953
Net unrealized appreciation of investments, dividends and dividend withholding tax reclaims
receivable, interest receivable, securities purchased and sold and foreign currency conversions.... 112,303,875
-------------
Total -- representing net assets applicable to capital shares outstanding........................... $ 708,611,069
-------------
-------------
<FN>
- ----------------
* On sales of $50,000 or more, the offering price is reduced.
+ Redemption price per share is equal to the net asset value per share less
any applicable contingent deferred sales charge.
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 57
<PAGE>
G.T. GLOBAL EMERGING MARKETS FUND
STATEMENT OF OPERATIONS
For the year ended October 31, 1994
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Investment income (Note 1):
Dividend income (net of foreign withholding tax of $887,782)......................................... $ 6,870,774
Interest income...................................................................................... 2,502,516
-------------
Total investment income.............................................................................. 9,373,290
-------------
Expenses:
Investment management and administration fees (Note 2)............................................... 4,702,869
Service and distribution expenses: (Note 2)
Class A.............................................................................. $ 1,530,305
Class B.............................................................................. 1,762,845 3,293,150
------------
Transfer agent fees (Note 2)......................................................................... 1,561,640
Custodian fees (Note 1).............................................................................. 850,844
Professional fees.................................................................................... 131,130
Registration fees.................................................................................... 117,269
Printing and postage expenses........................................................................ 92,960
Amortization of organizational expenses (Note 1)..................................................... 29,985
Directors' fees (Note 2)............................................................................. 9,940
Other................................................................................................ 9,123
-------------
Total expenses..................................................................................... 10,798,910
-------------
Net investment loss.................................................................................... (1,425,620)
-------------
Net realized and unrealized gain (loss) on investments and foreign currencies (Note 1):
Net realized gain on investments....................................................... 45,679,995
Net realized loss on foreign currency conversions...................................... (17,446,074)
------------
Net realized gain.................................................................................... 28,233,921
Change in unrealized appreciation of dividends and dividend withholding tax reclaims
receivable, interest receivable, securities purchased and sold, and foreign currency
conversions........................................................................... 34,245
Change in unrealized appreciation of investments....................................... 81,938,011
------------
Net unrealized appreciation.......................................................................... 81,972,256
-------------
Net realized and unrealized gain on investments and foreign currencies................................. 110,206,177
-------------
Net increase in net assets resulting from operations................................................... $ 108,780,557
-------------
-------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 58
<PAGE>
G.T. GLOBAL EMERGING MARKETS FUND
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
OCTOBER 31, 1994 OCTOBER 31, 1993
---------------- ----------------
<S> <C> <C>
Increase in net assets
Operations:
Net investment income (loss)................................................................. $ (1,425,620) $ 52,511
Net realized gain on investments and foreign currency conversions............................ 28,233,921 5,905,500
Change in unrealized appreciation (depreciation) of investments, dividends and dividend
withholding tax reclaims receivable, interest receivable, securities purchased and sold, and
foreign currency conversions................................................................ 81,972,256 31,607,262
---------------- ----------------
Net increase in net assets resulting from operations......................................... 108,780,557 37,565,273
---------------- ----------------
Class A:+
Distributions to shareholders from: (Note 1)
Net investment income........................................................................ 0 (632,778)
Net realized gains on investments............................................................ (4,115,024) 0
Class B:++
Distributions to shareholders from: (Note 1)
Net investment income........................................................................ 0 0
Net realized gains on investments............................................................ (1,126,597) 0
Capital share transactions (Note 4):
Increase from capital shares sold and reinvested............................................. 883,196,940 153,951,744
Decrease from capital shares repurchased..................................................... (498,150,727) (55,415,883)
---------------- ----------------
Net increase from capital share transactions................................................. 385,046,213 98,535,861
---------------- ----------------
Total increase in net assets................................................................... 488,585,149 135,468,356
Net assets:
Beginning of year............................................................................ 220,025,920 84,557,564
---------------- ----------------
End of year.................................................................................. $ 708,611,069* $ 220,025,920**
----------------
---------------- ----------------
----------------
<FN>
- ----------------
* Including undistributed net investment income of $0.
** Including undistributed net investment income of $(31,693).
+ All capital shares issued and outstanding as of March 31, 1993 were
reclassified as Class A shares.
++ Commencing April 1, 1993, the Fund began offering Class B shares.
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 59
<PAGE>
G.T. GLOBAL EMERGING MARKETS FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout each period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
CLASS A+
---------------------------------------------------------
MAY 18, 1992
YEAR ENDED OCTOBER 31, (COMMENCEMENT OF
----------------------------------- OPERATIONS) TO
1994 1993 OCTOBER 31, 1992
---------------- ---------------- -------------------
<S> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period..... $ 14.42 $ 11.10 $ 11.43
---------------- ---------------- --------
Income from investment operations:
Net investment income (loss)........... (0.02) 0.02* 0.07*
Net realized and unrealized gain (loss)
on investments........................ 4.68 3.38 (0.40)
---------------- ---------------- --------
Net increase (decrease) from investment
operations............................ 4.66 3.40 (0.33)
---------------- ---------------- --------
Distributions:
Net investment income.................. (0.01) (0.08) (0.00)
Net realized gain on investments....... (0.26) (0.00) (0.00)
---------------- ---------------- --------
Total distributions.................. (0.27) (0.08) (0.00)
---------------- ---------------- --------
Net asset value, end of period........... $ 18.81 $ 14.42 $ 11.10
---------------- ---------------- --------
---------------- ---------------- --------
Total investment return (c).............. 32.58% 30.9% (2.9)%(a)
Ratios and supplemental data:
Net assets, end of period (in 000's)..... $417,322 $187,808 $84,558
Ratio of net investment income (loss) to
average net assets...................... (0.11)% 0.1%* 1.7%*(b)
Ratio of expenses to average net
assets.................................. 2.06% 2.4%* 2.4%*(b)
Portfolio turnover rate+++............... 100% 99% 32%(b)
<CAPTION>
CLASS B++
-----------------------------------
YEAR ENDED APRIL 1, 1993 TO
OCTOBER 31, 1994 OCTOBER 31, 1993
---------------- ----------------
<S> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period..... $ 14.39 $ 11.47
---------------- --------
Income from investment operations:
Net investment income (loss)........... (0.12) 0.00**
Net realized and unrealized gain (loss)
on investments........................ 4.67 2.92
---------------- --------
Net increase (decrease) from investment
operations............................ 4.55 2.92
---------------- --------
Distributions:
Net investment income.................. (0.00) (0.00)
Net realized gain on investments....... (0.26) (0.00)
---------------- --------
Total distributions.................. (0.26) (0.00)
---------------- --------
Net asset value, end of period........... $ 18.68 $ 14.39
---------------- --------
---------------- --------
Total investment return (c).............. 31.77% 25.5%(a)
Ratios and supplemental data:
Net assets, end of period (in 000's)..... $291,289 $32,318
Ratio of net investment income (loss) to
average net assets...................... (0.61)% (0.4)%**(b)
Ratio of expenses to average net
assets.................................. 2.56% 2.9%**(b)
Portfolio turnover rate+++............... 100% 99%
<FN>
- ----------------
+ All capital shares issued and outstanding as of March 31, 1993 were
reclassified as Class A shares.
++ Commencing April 1, 1993, the Fund began offering Class B shares.
+++ Portfolio turnover is calculated on the basis of the Fund as a whole
without distinguishing between the classes of shares issued.
* Includes reimbursement by G.T. Capital Management, Inc. of Fund operating
expenses of $0.02 for the year ended October 31, 1993 and for the period
from May 18, 1992 to October 31, 1992, respectively. Without such
reimbursements, the expense ratios would have been 2.61% and 2.91% and the
ratio of net investment income to average net assets would have been 0.36%
and 1.21% for the year ended October 31, 1993 and for the period from May
18, 1992 to October 31, 1992, respectively (See Note 2).
** Includes reimbursement by G.T. Capital Management, Inc. of Fund operating
expenses of $0.02. Without such reimbursement, the expense ratio would have
been 3.63% and the ratio of net investment income to average net assets
would have been (0.76)% (See Note 2).
(a) Not annualized.
(b) Annualized.
(c) Total investment return does not include sales charges.
</TABLE>
Statement of Additional Information Page 60
<PAGE>
G.T. GLOBAL EMERGING MARKETS FUND
NOTES TO
FINANCIAL STATEMENTS
October 31, 1994
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
G.T. Global Emerging Markets Fund ("Fund") is a separate series of G.T.
Investment Funds, Inc. ("Company"). The Company is organized as a Maryland
corporation and is registered under the Investment Company Act of 1940, as
amended ("1940 Act"), as a diversified, open-end management investment company.
The Company has eleven series of shares in operation, each series corresponding
to a distinct portfolio of investments. The following is a summary of
significant accounting policies consistently followed by the Fund in the
preparation of the financial statements. The policies are in conformity with
generally accepted accounting principles.
(A) PORTFOLIO VALUATION
The Fund calculates the net asset value of and completes orders to purchase,
exchange or repurchase Fund shares on each business day, with the exception of
those days on which the New York Stock Exchange is closed.
Equity securities are valued at the last sale price on the exchange on which
such securities are traded, or, in the principal over-the-counter market in
which such securities are traded as of the close of business on the day the
securities are being valued or, lacking any sales, at the last available bid
price. In cases where securities are traded on more than one exchange, the
securities are valued on the exchange determined by G.T. Capital Management,
Inc. ("G.T. Capital") to be the primary market.
Fixed income investments are valued at the mean of representative quoted bid and
ask prices for such investments or, if such prices are not available, at prices
for investments of comparative maturity, quality and type; however, when G.T.
Capital deems it appropriate, prices obtained for the day of valuation from a
bond pricing service will be used. Short-term investments with a maturity of 60
days or less are valued at amortized cost adjusted for foreign exchange
translation and market fluctuation, if any.
Investments for which market quotations are not readily available (including
restricted securities which are subject to limitations on their sale) are valued
at fair value as determined in good faith by or under the direction of the
Company's Board of Directors.
Portfolio securities which are primarily traded on foreign exchanges are
generally valued at the preceding closing values of such securities on their
respective exchanges, and those values are then translated into U.S. dollars at
the current exchange rate, except that when an occurrence subsequent to the time
a value was so established is likely to have materially changed such value, then
the fair value of those securities will be determined by consideration of other
factors by or under the direction of the Company's Board of Directors.
(B) FOREIGN CURRENCY TRANSLATION
The accounting records are maintained in U.S. dollars. The market values of
foreign securities, currency holdings, other assets and liabilities are recorded
in the books and records of the Fund after translation to U.S. dollars based on
the exchange rates on that day. The cost of each security is determined using
historical exchange rates. Income and withholding taxes are translated at
prevailing exchange rates when accrued or incurred.
The Fund does not isolate that portion of the results of operations resulting
from changes in foreign exchange rates on investments from the fluctuations
arising from changes in market prices of securities held. Such fluctuations are
included with the net realized and unrealized gain or loss from investments.
Reported net realized foreign exchange gains or losses arise from sales and
maturities of short-term securities, forward foreign currency contracts, sales
of foreign currency conversions, currency gains or losses realized between the
trade and settlement dates on securities transactions, the difference between
the amounts of dividends, interest, and foreign withholding taxes recorded on
the Fund's books, and the U.S. dollar equivalent of the amounts actually
received or paid. Net unrealized foreign exchange gains and losses arise from
changes in the value of assets and liabilities other than investments in
securities at fiscal year end, resulting from changes in the exchange rate.
(C) REPURCHASE AGREEMENTS
With respect to repurchase agreements entered into by the Fund, it is the Fund's
policy to always receive, as collateral, U.S. government securities or other
high quality debt securities of which the value, including
Statement of Additional Information Page 61
<PAGE>
G.T. GLOBAL EMERGING MARKETS FUND
accrued interest, is at least equal to the amount to be repaid to the Fund under
each agreement at its maturity.
(D) FORWARD FOREIGN CURRENCY CONTRACTS
A forward foreign currency contract ("Forward") is an agreement between two
parties to buy and sell a currency at a set price on a future date. The market
value of the Forward fluctuates with changes in currency exchange rates. The
Forward is marked-to-market daily and the change in market value is recorded by
the Fund as an unrealized gain or loss. When the Forward is closed, the Fund
records a realized gain or loss equal to the difference between the value at the
time it was opened and the value at the time it was closed. The Fund could be
exposed to risk if a counterparty is unable to meet the terms of the contract or
if the value of the currency changes unfavorably. The Fund may enter into
Forwards in connection with planned purchases or sales of securities or to hedge
the value of portfolio securities denominated in a foreign currency.
(E) SECURITY TRANSACTIONS AND RELATED INVESTMENT INCOME
Security transactions are accounted for on the trade date (date the order to buy
or sell is executed). The cost of securities sold is determined on an identified
cost basis. Dividends are recorded on the ex-dividend date. Interest income is
recorded on the accrual basis. Where a high level of uncertainty exists as to
its collection, income is recorded net of all withholding tax with any rebate
recorded when received. The Fund may trade securities on other than normal
settlement terms. This may increase the risk if the other party to the
transaction fails to deliver and causes the Fund to subsequently invest at less
advantageous prices.
(F) PORTFOLIO SECURITIES LOANED
At October 31, 1994, stocks with an aggregate value of approximately $15,568,187
were on loan to brokers. The loans were secured by cash collateral of
$16,637,500 received by the Fund. For international securities, cash collateral
is received by the Fund against loaned securities in an amount at least equal to
105% of the market value of the loaned securities at the inception of each loan.
This collateral must be maintained at not less than 103% of the market value of
the loaned securities during the period of the loan. For domestic securities,
cash collateral is received by the Fund against loaned securities in an amount
at least equal to 102% of the market value of the loaned securities at the
inception of each loan. This collateral must be maintained at not less than 100%
of the market value of the loaned securities during the period of each loan. For
the year ended October 31, 1994, the Fund received fees of $79,949 which were
used to reduce the Fund's custodian fees.
(G) TAXES
It is the policy of the Fund to meet the requirements for qualification as a
"regulated investment company" under the Internal Revenue Code of 1986, as
amended ("Code"). It is also the intention of the Fund to make distributions
sufficient to avoid imposition of any excise tax under Section 4982 of the Code.
Therefore, no provision has been made for Federal taxes on income, capital
gains, or unrealized appreciation of securities held, and excise tax on income
and capital gains.
(H) DISTRIBUTIONS TO SHAREHOLDERS
Distributions to shareholders are recorded by the Fund on the ex-date. Income
and capital gain distributions are determined in accordance with Federal income
tax regulations which may differ from generally accepted accounting principles.
These differences are primarily due to differing treatments of income and gains
on various investment securities held by the Fund and timing differences.
(I) DEFERRED ORGANIZATIONAL EXPENSES
Expenses incurred by the Fund in connection with its organization, its
registration with the Securities and Exchange Commission and with various states
and the initial public offering of its shares aggregated $61,975. These expenses
are being amortized on a straightline basis over a five-year period.
(J) ADOPTION OF AICPA STATEMENT OF POSITION 93-2
As of November 1, 1993, the Fund adopted Statement of Position 93-2
"Determination, Disclosure, and Financial Statement Presentation of Income,
Capital Gain, and Return of Capital Distributions by Investment Companies."
Accordingly, permanent book and tax basis differences relating to shareholder
distributions have been reclassified. As of November 1, 1993, the cumulative
effect of such differences totaling $31,693 was reclassified from accumulated
net realized gains on investments to accumulated net investment loss. Net
investment loss, net realized gain on investments and net assets were not
affected by this change. The Statement of Changes in Net Assets and the
Financial Highlights, for the prior periods, have not been restated to reflect
the changes in this presentation.
(K) FOREIGN SECURITIES
There are certain additional considerations and risks associated with investing
in foreign securities and currency transactions that are not inherent with
investments of domestic origin. The Fund's investment in emerging market
countries may involve greater risks than investments in more developed
Statement of Additional Information Page 62
<PAGE>
G.T. GLOBAL EMERGING MARKETS FUND
markets and the price of such investments may be volatile. These risks of
investing in foreign and emerging markets may include foreign currency exchange
rate fluctuations, perceived credit risk, adverse political and economic
developments and possible adverse foreign government intervention.
(L) INDEXED SECURITIES
The Fund may invest in indexed securities whose value is linked either directly
or indirectly to changes in foreign currencies, interest rates, equities,
indices, or other reference instruments. Indexed securities may be more volatile
than the reference instrument itself, but any loss is limited to the amount of
the original investment.
2. RELATED PARTIES
G.T. Capital is the Fund's investment manager and administrator. The Fund pays
investment management and administration fees to G.T. Capital at the annualized
rate of 0.975% on the first $500 million of average daily net assets of the
Fund; 0.95% on the next $500 million; 0.925% on the next $500 million and 0.90%
on amounts thereafter. These fees are computed daily and paid monthly, and are
subject to reduction in any year to the extent that the Fund's expenses
(exclusive of brokerage commissions, taxes, interest, distribution-related
expenses and extraordinary expenses) exceed the most stringent limits prescribed
by the laws or regulations of any state in which the Fund's shares are offered
for sale, based on the average total net asset value of the Fund.
G.T. Global Financial Services, Inc. ("G.T. Global"), an affiliate of G.T.
Capital, serves as the Fund's distributor. The Fund offers Class A shares and
Class B shares for purchase.
Class A shares are subject to initial sales charges imposed at the time of
purchase, in accordance with the schedule included in the Fund's current
prospectus. G.T. Global collects the sales charges imposed on sales of Class A
shares, and reallows a portion of such charges to dealers through which the
sales are made. For the year ended October 31, 1994, G.T. Global retained
$460,124 of such sales charges. G.T. Global also makes ongoing shareholder
servicing and trail commission payments to dealers whose clients hold Class A
shares.
Class B shares are not subject to initial sales charges. When Class B shares are
sold, G.T. Global from its own resources pays commissions to dealers through
which the sales are made. Certain redemptions of Class B shares made within six
years of purchase are subject to contingent deferred sales charges ("CDSCs"), in
accordance with the Fund's current prospectus. For the year ended October 31,
1994, G.T. Global collected CDSCs in the amount of $433,744. In addition, G.T.
Global makes ongoing shareholder servicing and trail commission payments to
dealers whose clients hold Class B shares.
Pursuant to Rule 12b-1 under the 1940 Act, the Company's Board of Directors has
adopted separate distribution plans with respect to the Fund's Class A shares
("Class A Plan") and Class B shares ("Class B Plan"), pursuant to which the Fund
reimburses G.T. Global for a portion of its shareholder servicing and
distribution expenses. Under the Class A Plan, the Fund may pay G.T. Global a
service fee at the annualized rate of up to 0.25% of the average daily net
assets of the Fund's Class A shares for G.T. Global's expenditures incurred in
servicing and maintaining shareholder accounts, and may pay G.T. Global a
distribution fee at the annualized rate of up to 0.50% of the average daily net
assets of the Fund's Class A shares, less any amounts paid by the Fund as the
aforementioned service fee, for G.T. Global's expenditures incurred in providing
services as distributor. All expenses for which G.T. Global is reimbursed under
the Class A Plan will have been incurred within one year of such reimbursement.
Pursuant to the Fund's Class B Plan, the Fund may pay G.T. Global a service fee
at the annualized rate of up to 0.25% of the average daily net assets of the
Fund's Class B shares for G.T. Global's expenditures incurred in servicing and
maintaining shareholder accounts, and may pay G.T. Global a distribution fee at
the annualized rate of up to 0.75% of the average daily net assets of the Fund's
Class B Shares for G.T. Global's expenditures incurred in providing services as
distributor. Expenses incurred under the Class B Plan in excess of 1.00%
annually may be carried forward for reimbursement in subsequent years as long as
that Plan continues in effect.
G.T. Capital and G.T. Global voluntarily have undertaken to limit the Fund's
expenses (exclusive of brokerage commissions, taxes, interest, and extraordinary
expenses) to the maximum annual rate of 2.40% and 2.90% of the average daily net
assets of the Fund's Class A and Class B shares, respectively. If necessary,
this limitation will be effected by waivers by G.T. Capital of investment
management and administration fees, waivers by G.T. Global of payments under the
Class A Plan and/or Class B Plan and/or reimbursements by G.T. Capital or G.T.
Global of portions of the Fund's other operating expenses.
G.T. Global Investor Services, Inc. ("G.T. Services"), an affiliate of G.T.
Capital and G.T. Global, is the transfer agent of the Fund.
Statement of Additional Information Page 63
<PAGE>
G.T. GLOBAL EMERGING MARKETS FUND
The Company pays each of its Directors who is not an employee, officer or
director of G.T. Capital, G.T. Global or G.T. Services $5,000 per year plus $300
for each meeting of the board or any committee thereof attended by the Director.
3. PURCHASES AND SALES OF SECURITIES
For the year ended October 31, 1994, purchases and sales of investment
securities by the Fund, other than U.S. government obligations and short-term
investments, aggregated $728,291,850 and $439,206,871, respectively. There were
no purchases or sales of U.S. government obligations by the Fund for the year
ended October 31, 1994.
4. CAPITAL SHARES
At October 31, 1994, there were 6,000,000,000 shares of the Company's common
stock authorized, at $0.0001 par value. Of this amount, 200,000,000 were
classified as shares of the Fund; 400,000,000 were classified as shares of G.T.
Global Government Income Fund; 200,000,000 were classified as shares of G.T.
Global Health Care Fund; 200,000,000 were classified as shares of G.T. Global
Strategic Income Fund; 200,000,000 were classified as shares of G.T. Global
Currency Fund (inactive); 200,000,000 were classified as shares of G.T. Global
Growth & Income Fund; 200,000,000 were classified as shares of G.T. Global Small
Companies Fund (inactive); 200,000,000 were classified as shares of G.T. Latin
America Growth Fund; 400,000,000 were classified as shares of G.T. Global
Telecommunications Fund; 200,000,000 were classified as shares of G.T. Global
High Income Fund; 200,000,000 were classified as shares of G.T. Global Financial
Services Fund; 200,000,000 were classified as shares of G.T. Global Natural
Resources Fund; 200,000,000 were classified as shares of G.T. Global
Infrastructure Fund; 200,000,000 were classified as shares of G.T. Global
Consumer Products and Services Fund (inactive); and 2,800,000,000 shares remain
unclassified. The shares of each of the foregoing series of the Company were
divided equally into two classes, designated Class A and Class B common stock.
Transactions in capital shares of the Fund were as follows:
CAPITAL SHARE TRANSACTIONS
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
OCTOBER 31, 1994 OCTOBER 31, 1993
-------------------------- -------------------------
SHARES AMOUNT SHARES AMOUNT
----------- ------------- ---------- -------------
<S> <C> <C> <C> <C>
CLASS A:
Shares sold................................................................. 31,738,988 $ 542,276,829 9,808,710 $ 123,536,904
Shares issued in connection with reinvestment of distributions.............. 224,680 3,671,269 45,800 489,150
----------- ------------- ---------- -------------
31,963,668 545,948,098 9,854,510 124,026,054
Shares repurchased.......................................................... (22,802,389) (390,541,648) (4,443,274) (55,156,891)
----------- ------------- ---------- -------------
Net increase................................................................ 9,161,279 $ 155,406,450 5,411,236 $ 68,869,163
----------- ------------- ---------- -------------
----------- ------------- ---------- -------------
</TABLE>
<TABLE>
<CAPTION>
APRIL 1, 1993
YEAR ENDED TO
OCTOBER 31, 1994 OCTOBER 31, 1993
-------------------------- -------------------------
SHARES AMOUNT SHARES AMOUNT
----------- ------------- ---------- -------------
<S> <C> <C> <C> <C>
CLASS B:
Shares sold................................................................. 19,746,670 $ 336,338,827 2,257,605 $ 29,925,689
Shares issued in connection with reinvestment of distributions.............. 55,761 910,015 0 0
----------- ------------- ---------- -------------
19,802,431 337,248,842 2,257,605 29,925,689
Shares repurchased.......................................................... (6,446,858) (107,609,079) (19,215) (258,992)
----------- ------------- ---------- -------------
Net increase................................................................ 13,355,573 $ 229,639,763 2,238,390 $ 29,666,697
----------- ------------- ---------- -------------
----------- ------------- ---------- -------------
</TABLE>
Statement of Additional Information Page 64
<PAGE>
G.T. GLOBAL EMERGING MARKETS FUND
NOTES
- --------------------------------------------------------------------------------
Statement of Additional Information Page 65
<PAGE>
G.T. GLOBAL EMERGING MARKETS FUND
NOTES
- --------------------------------------------------------------------------------
Statement of Additional Information Page 66
<PAGE>
G.T. GLOBAL EMERGING MARKETS FUND
NOTES
- --------------------------------------------------------------------------------
Statement of Additional Information Page 67
<PAGE>
G.T. GLOBAL EMERGING MARKETS FUND
[LOGO]
G.T. GLOBAL GROUP OF FUNDS
G.T. GLOBAL OFFERS A BROAD RANGE OF MUTUAL FUNDS TO COMPLEMENT MANY
INVESTORS' PORTFOLIOS. FOR MORE INFORMATION AND A PROSPECTUS ON ANY OF THE
G.T. GLOBAL MUTUAL FUNDS, PLEASE CONTACT YOUR INVESTMENT COUNSELOR OR CALL
G.T. GLOBAL DIRECTLY AT 1- 800-824-1580.
GROWTH FUNDS
/ / GLOBALLY DIVERSIFIED FUNDS
G.T. GLOBAL WORLDWIDE GROWTH FUND
Invests around the world, including the U.S.
G.T. GLOBAL INTERNATIONAL GROWTH FUND
Provides portfolio diversity for U.S. investors by investing outside the U.S.
G.T. GLOBAL GLOBAL EMERGING MARKETS FUND
Gives access to the growth potential of developing economies
/ / GLOBAL THEME FUNDS
G.T. GLOBAL HEALTH CARE FUND
Invests in the growing health care industries worldwide
G.T. GLOBAL TELECOMMUNICATIONS FUND
Invests in companies worldwide that develop, manufacture or sell
telecommunications services or equipment
G.T. GLOBAL INFRASTRUCTURE FUND
Seeks companies that build, improve or maintain a country's infrastructure
G.T. GLOBAL FINANCIAL SERVICES FUND
Focuses on the worldwide opportunities from the demand for financial services
and products
G.T. GLOBAL NATURAL RESOURCES FUND
Concentrates on companies that own, explore or develop natural resources
G.T. GLOBAL CONSUMER PRODUCTS AND
SERVICES FUND
Invests in companies that manufacture, market, retail, or distribute consumer
products or services
/ / REGIONALLY DIVERSIFIED FUNDS
G.T. GLOBAL NEW PACIFIC GROWTH FUND
Offers access to the emerging and established markets of the Pacific Rim,
excluding Japan
G.T. GLOBAL EUROPE GROWTH FUND
Focuses on investment opportunities in the new, unified Europe
G.T. LATIN AMERICA GROWTH FUND
Invests in the emerging markets of Latin America
/ / SINGLE COUNTRY FUNDS
G.T. GLOBAL AMERICA GROWTH FUND
Concentrates on small and medium-sized companies in the U.S.
G.T. GLOBAL JAPAN GROWTH FUND
Provides U.S. investors with direct access to the Japanese market
GROWTH AND INCOME FUND
G.T. GLOBAL GROWTH & INCOME FUND
Invests in blue-chip stocks and government bonds from around the world
INCOME FUNDS
G.T. GLOBAL GOVERNMENT INCOME FUND
Invests in global government securities
G.T. GLOBAL STRATEGIC INCOME FUND
Allocates its assets among debt securities from the U.S., developed foreign
countries and emerging markets
G.T. GLOBAL HIGH INCOME FUND
Invests in a portfolio of emerging market debt securities
MONEY MARKET FUND
G.T. GLOBAL DOLLAR FUND
Invests in high quality, U.S. dollar-denominated money market securities
worldwide for stability and preservation of capital
NO DEALER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS STATEMENT OF
ADDITIONAL INFORMATION AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY G.T.
GLOBAL GOVERNMENT INCOME FUND, G.T. GLOBAL STRATEGIC INCOME FUND, G.T.
GLOBAL HIGH INCOME FUND, G.T. CAPITAL MANAGEMENT, INC. OR G.T. GLOBAL
FINANCIAL SERVICES, INC. THIS STATEMENT OF ADDITIONAL INFORMATION DOES NOT
CONSTITUTE AN OFFER TO SELL OR SOLICITATION OF ANY OFFER TO BUY ANY OF THE
SECURITIES OFFERED HEREBY IN ANY JURISDICTION TO ANY PERSON TO WHOM IT IS
UNLAWFUL TO MAKE SUCH OFFER IN SUCH JURISDICTION.
EMESX605MC
