<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 30, 1995
FILE NOS. 33-19338
811-05426
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
POST-EFFECTIVE AMENDMENT NO. 42
/X/
AND
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
AMENDMENT NO. 44
/X/
------------------------
G.T. INVESTMENT FUNDS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
50 CALIFORNIA STREET, 27TH FLOOR,
SAN FRANCISCO, CALIFORNIA 94111
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE:
(415) 392-6181
------------------------
<TABLE>
<S> <C>
DAVID J. THELANDER, ESQ. ARTHUR J. BROWN, ESQ.
ASSISTANT GENERAL COUNSEL DANIEL T. STEINER, ESQ.
G.T. CAPITAL MANAGEMENT, INC. KIRKPATRICK & LOCKHART
50 CALIFORNIA STREET, 27TH FLOOR 1800 M STREET N.W.,
SAN FRANCISCO, CALIFORNIA 94111 SOUTH LOBBY - 9TH FLOOR
(NAME AND ADDRESS OF AGENT FOR SERVICE) WASHINGTON, D.C. 20036
(202) 778-9000
</TABLE>
------------------------
IT IS PROPOSED THAT THIS FILING WILL BECOME EFFECTIVE:
/X/ IMMEDIATELY UPON FILING PURSUANT TO PARAGRAPH (B) OF RULE 485
/ / ON 1995 PURSUANT TO PARAGRAPH (B) OF RULE 485
/ / 60 DAYS AFTER FILING PURSUANT TO PARAGRAPH (A)(I) OF RULE 485
/ / ON PURSUANT TO PARAGRAPH (A)(I) OF RULE 485
/ / 75 DAYS AFTER FILING PURSUANT TO PARAGRAPH (A)(II) OF RULE 485
/ / ON PURSUANT TO PARAGRAPH (A)(II) OF RULE 485
/ / THIS POST-EFFECTIVE AMENDMENT DESIGNATES A NEW EFFECTIVE DATE FOR A
PREVIOUSLY FILED POST-EFFECTIVE AMENDMENT.
PURSUANT TO RULE 24F-2 UNDER THE INVESTMENT COMPANY ACT OF 1940, REGISTRANT HAS
PREVIOUSLY ELECTED TO REGISTER AN INDEFINITE NUMBER OF ITS SHARES OF COMMON
STOCK. A RULE 24F-2 NOTICE FOR REGISTRANT'S FISCAL YEAR ENDED OCTOBER 31, 1994,
WAS FILED ON DECEMBER 29, 1994.
CERTAIN SERIES OF THE G.T. INVESTMENT FUNDS, INC. ARE "FEEDER FUNDS" IN A
"MASTER/FEEDER" FUND ARRANGEMENT. THIS POST-EFFECTIVE AMENDMENT NO. 42 INCLUDES
A MANUALLY EXECUTED SIGNATURE PAGE FOR THE MASTER TRUST, GLOBAL INVESTMENT
PORTFOLIO.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
THIS IS PAGE ONE OF PAGES
EXHIBIT INDEX LOCATED AT PAGE
<PAGE>
G.T. INVESTMENT FUNDS, INC.
CROSS-REFERENCE SHEET
BETWEEN ITEMS ENUMERATED IN FORM N-1A AND THIS AMENDMENT
PROSPECTUS
<TABLE>
<CAPTION>
ITEM NO. OF
PART A OF FORM N-1A CAPTIONS IN PROSPECTUS
- --------------------------------- ------------------------------------------------------------------
<S> <C>
1. Cover Page................... Cover Page
2. Synopsis..................... Prospectus Summary
3. Condensed Financial
Information.................. Financial Highlights
4. General Description of
Registrant................... Investment Objective and Policies; Risk Factors; Management; Other
Information
5. Management of the
Fund......................... Management
6. Capital Stock and Other
Securities................... Dividends, Other Distributions and Federal Income Taxation; Other
Information
7. Purchase of Securities Being
Offered...................... Alternative Purchase Plan; How to Invest; How to Make Exchanges;
Calculation of Net Asset Value; Management
8. Redemption or
Repurchase................... Alternative Purchase Plan; How to Redeem Shares; Calculation of
Net Asset Value
9. Pending Legal
Proceedings.................. Inapplicable
<CAPTION>
PROSPECTUS -- ADVISOR CLASS
ITEM NO. OF
PART A OF FORM N-1A CAPTIONS IN STATEMENT OF ADDITIONAL INFORMATION
- --------------------------------- ------------------------------------------------------------------
<S> <C>
1. Cover Page.................... Cover Page
2. Synopsis...................... Prospectus Summary
3. Condensed Financial
Information.................. Financial Highlights
4. General Description of
Registrant................... Investment Objective and Policies; Risk Factors; Management; Other
Information
5. Management of the Fund........ Management
6. Capital Stock and Other
Securities................... Dividends, Other Distributions and Federal Income Taxation; Other
Information
7. Purchase of Securities Being
Offered...................... How to Invest; How to Make Exchanges; Calculation of Net Asset
Value; Management
8. Redemption or Repurchase...... How to Redeem Shares; Calculation of Net Asset Value
9. Pending Legal Proceedings..... Inapplicable
</TABLE>
<PAGE>
G.T. INVESTMENT FUNDS, INC.
CROSS-REFERENCE SHEET
BETWEEN ITEMS ENUMERATED IN FORM N-1A AND THIS AMENDMENT
STATEMENT OF ADDITIONAL INFORMATION
<TABLE>
<CAPTION>
ITEM NO. OF
PART B OF FORM N-1A CAPTIONS IN STATEMENT OF ADDITIONAL INFORMATION
- --------------------------------- ------------------------------------------------------------------
<S> <C>
10. Cover Page................... Cover Page
11. Table of Contents............ Table of Contents
12. General Information and
History...................... Cover Page; Additional Information
13. Investment Objectives and
Policies..................... Investment Objective and Policies;
Investment Limitations; Options, Futures and Currency Strategies;
Risk Factors; Execution of Portfolio Transactions
14. Management of the
Fund......................... Directors and Executive Officers; Management
15. Control Persons and Principal
Holders of Securities........ Directors and Executive Officers; Management
16. Investment Advisory and Other
Services..................... Management; Additional Information
17. Brokerage Allocation......... Execution of Portfolio Transactions
18. Capital Stock and Other
Securities................... Inapplicable
19. Purchase, Redemption and
Pricing of Securities Being
Offered...................... Valuation of Fund Shares; Information Relating to
Sales and Redemptions
20. Tax Status................... Taxes
21. Underwriters................. Management
22. Calculation of Performance
Data......................... Investment Results
23. Financial Statements......... Financial Statements
</TABLE>
<PAGE>
G.T. INVESTMENT FUNDS, INC.
CROSS-REFERENCE SHEET
BETWEEN ITEMS ENUMERATED IN FORM N-1A AND THIS AMENDMENT
(CONTINUED)
STATEMENT OF ADDITIONAL INFORMATION -- ADVISOR CLASS
<TABLE>
<CAPTION>
ITEM NO. OF
PART B OF FORM N-1A CAPTIONS IN STATEMENT OF ADDITIONAL INFORMATION
- --------------------------------- ------------------------------------------------------------------
<S> <C>
10. Cover Page................... Cover Page
11. Table of Contents............ Table of Contents
12. General Information and
History...................... Cover Page; Additional Information
13. Investment Objectives and
Policies..................... Investment Objective and Policies;
Investment Limitations; Options, Futures and Currency Strategies;
Risk Factors; Execution of Portfolio Transactions
14. Management of the
Fund......................... Directors and Executive Officers; Management
15. Control Persons and Principal
Holders of Securities........ Directors and Executive Officers; Management
16. Investment Advisory and Other
Services..................... Management; Additional Information
17. Brokerage Allocation......... Execution of Portfolio Transactions
18. Capital Stock and Other
Securities................... Inapplicable
19. Purchase, Redemption and
Pricing of Securities Being
Offered...................... Valuation of Fund Shares; Information Relating to
Sales and Redemptions
20. Tax Status................... Taxes
21. Underwriters................. Management
22. Calculation of Performance
Data......................... Investment Results
23. Financial Statements......... Financial Statements
</TABLE>
<PAGE>
G.T. INVESTMENT FUNDS, INC.
CONTENTS OF POST-EFFECTIVE AMENDMENT
THIS POST-EFFECTIVE AMENDMENT TO THE REGISTRATION STATEMENT OF G.T. INVESTMENT
FUNDS, INC. CONTAINS THE FOLLOWING DOCUMENTS:
<TABLE>
<S> <C> <C>
Facing Sheet
Cross-Reference Sheet
Contents of Post-Effective Amendment
Part A -- Prospectus
-- G.T. Global Theme Funds
-- Prospectus -- Advisor Class
-- G.T. Global Theme Funds
Part B -- Statement of Additional Information
-- G.T. Global Theme Funds
-- Statement of Additional Information -- Advisor Class
-- G.T. Global Theme Funds
Part C -- Other Information
Signature Page -- G.T. Investment Funds, Inc.
-- Global Investment Portfolio
Exhibits
<FN>
- ------------------------
*The currently effective prospectuses and statements of additional information
for each of the following series of the Registrant are not affected by this
Amendment: G.T. Global Currency Fund, G.T. Global Small Companies Fund, G.T.
Global Government Income Fund, G.T. Global Strategic Income Fund, G.T. Global
High Income Fund, G.T. Global Growth & Income Fund, G.T. Latin America Growth
Fund, and G.T. Global Emerging Markets Fund.
</TABLE>
<PAGE>
[LOGO]
G.T. GLOBAL THEME FUNDS
SUPPLEMENT TO PROSPECTUS DATED MARCH 1, 1995
- --------------------------------------------------------------------------------
The following information supplements and should be read in conjunction with the
section of the Funds' Prospectus entitled "Financial Highlights":
The table below provides condensed financial information concerning income and
capital changes for one share of Class A and Class B shares of the G.T. Global
Consumer Products and Services Fund for the period shown. This information is
supplemented by the unaudited financial statements and accompanying notes
appearing in the Statement of Additional Information.
G.T. GLOBAL CONSUMER PRODUCTS AND SERVICES FUND
<TABLE>
<CAPTION>
CLASS A CLASS B
DECEMBER 30, 1994 DECEMBER 30, 1994
(COMMENCEMENT OF OPERATIONS) (COMMENCEMENT OF OPERATIONS)
TO APRIL 30, 1995 TO APRIL 30, 1995
(UNAUDITED)* (UNAUDITED)*
---------------------------- ----------------------------
<S> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period..................... $ 11.43 $ 11.43
------- -------
Income from investment operations:
Net investment income.................................. 0.10 0.08
Net realized and unrealized gain on investments........ 0.12 0.12
------- -------
Net increase in net asset value from investment
operations.............................................. 0.22 0.20
------- -------
Net asset value, end of period........................... $ 11.65 $ 11.63
------- -------
------- -------
Total investment return (c).............................. 1.92%(b) 1.75%(b)
Ratios and supplemental data:
Net assets, end of period (in 000's)..................... $ 1,615 $ 506
Ratio of net investment income to average net assets:
With reimbursement by G.T. Capital Management, Inc... 2.66%(a) 2.16%(a)
Without reimbursement by G.T. Capital Management,
Inc................................................. (33.87)%(a) (34.37)%(a)
Ratio of expenses to average net assets:
With reimbursement by G.T. Capital Management, Inc... 2.40%(a) 2.90%(a)
Without reimbursement by G.T. Capital Management,
Inc................................................. 38.93%(a) 39.43%(a)
<FN>
- ------------------
(a) Annualized.
(b) Not annualized.
(c) Total investment return does not include sales charges.
* These selected per share data were calculated based upon weighted average
shares outstanding during the period.
</TABLE>
June 30, 1995
THESU506085MC
<PAGE>
[LOGO] G.T. GLOBAL THEME FUNDS
PROSPECTUS -- MARCH 1, 1995
- --------------------------------------------------------------------------------
G.T. GLOBAL FINANCIAL SERVICES FUND
("Financial Services Fund") seeks long-term capital growth by investing all of
its investable assets in the Global Financial Services Portfolio ("Financial
Services Portfolio"), that, in turn, invests primarily in securities of
companies throughout the world that operate within the financial services
industry.
G.T. GLOBAL INFRASTRUCTURE FUND ("Infrastructure Fund") seeks long-term capital
growth by investing all of its investable assets in the Global Infrastructure
Portfolio ("Infrastructure Portfolio"), that, in turn, invests primarily in
securities of companies throughout the world that design, develop or provide
products and services significant to a country's infrastructure.
G.T. GLOBAL NATURAL RESOURCES FUND ("Natural Resources Fund") seeks long-term
capital growth by investing all of its investable assets in the Global Natural
Resources Portfolio ("Natural Resources Portfolio"), that, in turn, invests
primarily in securities of companies throughout the world that own, explore, or
develop natural resources and other basic commodities, or supply goods and
services to such companies.
G.T. GLOBAL CONSUMER PRODUCTS AND SERVICES FUND ("Consumer Products and Services
Fund") seeks long-term capital growth by investing all of its investable assets
in the Global Consumer Products and Services Portfolio ("Consumer Products and
Services Portfolio"), that, in turn, invests primarily in securities of
companies throughout the world that manufacture, market, retail, or distribute
consumer products and services.
G.T. GLOBAL HEALTH CARE FUND ("Health Care Fund") seeks long-term capital
appreciation by investing in securities of health care companies throughout the
world.
G.T. GLOBAL TELECOMMUNICATIONS FUND ("Telecommunications Fund") seeks long-term
growth of capital by investing primarily in securities of companies throughout
the world engaged in development, manufacture or sale of telecommunication
services or equipment.
Collectively, the above Funds are known as the G.T. Global Theme Funds.
There can be no assurance that any G.T. Global Theme Fund or any Portfolio will
achieve its investment objective.
FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR ENDORSED OR GUARANTEED BY,
ANY BANK, NOR ARE THEY FEDERALLY INSURED OR OTHERWISE PROTECTED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER AGENCY.
The Financial Services Fund, Infrastructure Fund, Natural Resources Fund,
Telecommunications Fund and Consumer Products and Services Fund are mutual funds
each organized as a diversified series, and the Health Care Fund as a
non-diversified series, of G.T. Investment Funds, Inc. ("Company"). THE
FINANCIAL SERVICES FUND, INFRASTRUCTURE FUND, NATURAL RESOURCES FUND AND
CONSUMER PRODUCTS AND SERVICES FUND, UNLIKE MANY OTHER INVESTMENT COMPANIES
WHICH DIRECTLY ACQUIRE AND MANAGE THEIR OWN PORTFOLIOS OF SECURITIES, EACH SEEKS
ITS INVESTMENT OBJECTIVE BY INVESTING ALL OF ITS INVESTABLE ASSETS IN ITS
CORRESPONDING PORTFOLIO, AS DESCRIBED ABOVE. The Financial Services Portfolio,
Infrastructure Portfolio, Natural Resources Portfolio and Consumer Products and
Services Portfolio ("Portfolios") and the Health Care Fund and
Telecommunications Fund are open-end management investment companies each
managed by G.T. CAPITAL MANAGEMENT, INC., ("G.T. Capital"). Each of the
Portfolios' investment objective is identical to that of its corresponding Fund.
This structure is different from that of many other investment companies which
directly acquire and manage their own portfolios. Accordingly, investors should
carefully consider this investment approach. For additional information, see
"Investment Objective and Policies" and "Management."
G.T. Capital attempts to identify countries where economic, political and
regulatory factors are likely to produce above-average growth rates and income,
and to further identify companies within the industries in which each of the
G.T. Global Theme Funds invests in such countries that are best positioned to
benefit from these factors.
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.
PROSPECTIVE WISCONSIN INVESTORS SHOULD NOTE THAT THE INFRASTRUCTURE FUND,
NATURAL RESOURCES FUND AND CONSUMER PRODUCTS AND SERVICES FUND MAY EACH INVEST
UP TO 10% OF ITS TOTAL ASSETS IN RESTRICTED SECURITIES. THIS INVESTMENT ACTIVITY
MAY BE CONSIDERED SPECULATIVE AND MAY INVOLVE GREATER RISK AND MAY INCREASE SUCH
FUNDS' EXPENSES.
This Prospectus sets forth concisely information that an investor should know
before investing and should be read carefully and retained for future reference.
A Statement of Additional Information, dated March 1, 1995, has been filed with
the Securities and Exchange Commission ("SEC") and, as amended or supplemented
from time to time, is incorporated herein by reference. The Statement of
Additional Information is available without charge by writing to the Funds at 50
California Street, 27th Floor, San Francisco, California 94111, or calling (800)
824-1580.
An investment in the G.T. Global Theme Funds offers the following advantages:
/ / Professional Management by a Leading Manager with Offices in the World's
Major Markets
/ / Low $500 Minimum Investment
/ / Alternative Purchase Plan
/ / Automatic Dividend and Other Distribution Reinvestment at No Additional
Sales Charge
/ / Exchange Privileges with the Corresponding Classes of the other G.T. Global
Mutual Funds
/ / Reduced Sales Charge Plans
/ / Dollar Cost Averaging Program
/ / Automatic Investment Plan
/ / Systematic Withdrawal Plan
FOR FURTHER INFORMATION, CONTACT (800) 824-1580 OR YOUR STOCKBROKER.
- --------------------------------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED ON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
Prospectus Page 1
<PAGE>
G.T. GLOBAL THEME FUNDS
TABLE OF CONTENTS
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Page
---------
<S> <C>
Prospectus Summary........................................................................ 3
Financial Highlights...................................................................... 12
Alternative Purchase Plan................................................................. 15
Investment Objective and Policies......................................................... 16
Risk Factors.............................................................................. 25
How to Invest............................................................................. 34
How to Make Exchanges..................................................................... 40
How to Redeem Shares...................................................................... 41
Shareholder Account Manual................................................................ 43
Calculation of Net Asset Value............................................................ 44
Dividends, Other Distributions and Federal Income Taxation................................ 44
Management................................................................................ 46
Other Information......................................................................... 53
</TABLE>
Prospectus Page 2
<PAGE>
G.T. GLOBAL THEME FUNDS
PROSPECTUS SUMMARY
- ------------------------------------------------------------
The following summary is qualified in its entirety by the more detailed
information appearing in the body of this Prospectus. Cross-references in this
summary are to headings in the body of the Prospectus.
<TABLE>
<S> <C> <C>
Investment Objective: The Financial Services Fund, Infrastructure Fund, Natural
Resources Fund and Consumer Products and Services Fund each seeks
long-term capital growth. The Health Care Fund seeks long-term
capital appreciation. The Telecommunications Fund seeks long-term
growth of capital
Principal Investments: Financial Services Fund invests all of its investable assets in
the Financial Services Portfolio, that, in turn, invests primarily
in the securities of companies throughout the world that operate
in the financial services industry
Infrastructure Fund invests all of its investable assets in the
Infrastructure Portfolio, that, in turn, invests primarily in the
securities of companies throughout the world that design, develop
or provide products and services significant to a country's
infrastructure
Natural Resources Fund invests all of its investable assets in the
Natural Resources Portfolio, that, in turn, invests primarily in
the securities of companies throughout the world that own, explore
or develop natural resources and other basic commodities, or
supply goods and services to such companies
Consumer Products and Services Fund invests all of its investable
assets in the Consumer Products and Services Portfolio, that, in
turn, invests primarily in the securities of companies throughout
the world that manufacture, market, retail or distribute consumer
products and services
Health Care Fund invests principally in the securities of health
care companies throughout the world
Telecommunications Fund invests principally in the securities of
companies throughout the world engaged in the development,
manufacture or sale of telecommunications services or equipment
Investment Manager: G.T. Capital is part of the G.T. Group, a leading international
investment advisory organization with over $22 billion under
management
Alternative Purchase Plan: Investors may select Class A or Class B shares, each subject to
different expenses and a different sales charge structure
Class A Shares: Offered at net asset value plus any applicable sales charge
(maximum is 4.75% of public offering price) and subject to service
and distribution fees at the annualized rate of up to 0.50% of the
average daily net assets of each Fund's Class A shares
Class B Shares: Offered at net asset value (a maximum contingent deferred sales
charge of 5% of the lesser of the shares' net asset value or the
original purchase price is imposed on certain redemptions made
within six years of date of purchase) and subject to service and
distribution fees at the annualized rate of up to 1.00% of the
average daily net assets of each Fund's Class B shares
Shares Available Through: Most brokerage firms nationwide, or directly through the Funds'
distributor
</TABLE>
Prospectus Page 3
<PAGE>
G.T. GLOBAL THEME FUNDS
PROSPECTUS SUMMARY
(Continued)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Exchange Privileges: Shares of a class of a Fund may be exchanged for shares of the
corresponding class of other G.T. Global Mutual Funds without a
sales charge
Dividends and Other
Distributions: 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 Fund shares of
the distributing class or in shares of the corresponding class of
other G.T. Global Mutual Funds without a sales charge
First Purchase: $500 minimum ($100 for individual retirement accounts ("IRAs") and
reduced amounts for certain other retirement plans)
Subsequent Purchases: $100 minimum (reduced amounts for IRAs and certain other
retirement plans)
Net Asset Values: Each class of the Health Care Fund, Telecommunications Fund,
Infrastructure Fund and Natural Resources Fund is quoted daily,
and the Financial Services Fund and Consumer Products and Services
Fund are expected to be quoted daily, in the financial section of
most newspapers
Other Features:
Class A Shares Letter of Intent Dollar Cost Averaging Program
Quantity Discounts Automatic Investment Plan
Right of Accumulation Systematic Withdrawal Plan
Reinstatement Privilege
Class B Shares Reinstatement Privilege Automatic Investment Plan
Systematic Withdrawal Plan Dollar Cost Averaging Program
</TABLE>
Prospectus Page 4
<PAGE>
G.T. GLOBAL THEME FUNDS
PROSPECTUS SUMMARY
(Continued)
- --------------------------------------------------------------------------------
THE G.T. GLOBAL THEME FUNDS. The Financial Services Fund, Infrastructure Fund,
Natural Resources Fund and Consumer Products and Services Fund each seeks
long-term capital growth, the Telecommunications Fund seeks long-term growth of
capital and the Health Care Fund seeks long-term capital appreciation. Each Fund
is hereinafter referred to individually as a "Fund" and collectively as "Funds."
In seeking this objective, each of the Financial Services Fund, Infrastructure
Fund, Natural Resources Fund and Consumer Products and Services Fund invests all
of its investable assets in the Financial Services Portfolio, Infrastructure
Portfolio, Natural Resources Portfolio and Consumer Products and Services
Portfolio, respectively, that, in turn, invests in securities in accordance with
an investment objective and policies identical to those of its corresponding
Fund. The Health Care Fund and Telecommunications Fund each seeks its investment
objective by investing primarily in securities of health care and
telecommunications companies, respectively, throughout the world. The Financial
Services Portfolio, Infrastructure Portfolio, Natural Resources Portfolio,
Consumer Products and Services Portfolio, Health Care Fund and
Telecommunications Fund are hereinafter referred to individually as a "Theme
Portfolio," or collectively, "Theme Portfolios." Each of the Theme Portfolios
concentrates in the industry corresponding to that Theme Portfolio's name, and
invests in companies engaged in activities related to its investment theme.
The Financial Services Fund, Infrastructure Fund, Natural Resources Fund,
Consumer Products and Services Fund and Telecommunications Fund are mutual funds
organized as diversified series, and the Health Care Fund as a non-diversified
series, of G.T. Investment Funds, Inc. (the "Company"). Shares of each Fund's
common stock are available through broker/dealers who have entered into
agreements to sell shares with the Funds' distributor, G.T. Global Financial
Services, Inc. ("G.T. Global"). Shares also may be acquired directly through the
Funds' distributor or through exchanges of shares of the other G.T. Global
Mutual Funds. See "How to Invest" and "Shareholder Account Manual." Shares may
be redeemed either through broker/ dealers or 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 Management, Inc. ("G.T.
Capital") is the investment manager and administrator for the Portfolios, the
Health Care Fund and Telecommunications Fund, and is the administrator for the
Financial Services Fund, Infrastructure Fund, Natural Resources Fund and
Consumer Products and Services Fund. G.T. Capital provides investment management
and/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, Toronto, London, Tokyo, Hong Kong,
Singapore and Sydney. As of January 3, 1995, total assets under G.T. Group
management exceeded $22 billion. Of this amount, more than $19 billion was
invested in the securities of non-U.S. issuers. The companies comprising the
G.T. Group are indirect subsidiaries of the Prince of Liechtenstein Foundation.
See "Management."
INVESTMENT POLICIES. The Financial Services Fund seeks its objective by
investing all of its investable assets in the Financial Services Portfolio,
that, in turn, normally invests at least 65% of its total assets in common and
preferred stocks and warrants to acquire such securities issued by financial
services companies throughout the world. The remainder of the Financial Services
Portfolio's assets may be invested in debt securities issued by financial
services companies and/or in equity and debt securities of companies outside of
the financial services industry, which, in the opinion of G.T. Capital, stand to
benefit from developments in the financial services industry. See "Investment
Objective and Policies."
The Infrastructure Fund seeks its investment objective by investing all of its
investable assets in the Infrastructure Portfolio, that, in turn, normally
Prospectus Page 5
<PAGE>
G.T. GLOBAL THEME FUNDS
PROSPECTUS SUMMARY
(Continued)
- --------------------------------------------------------------------------------
invests at least 65% of its total assets in common and preferred stocks and
warrants to acquire such securities issued by infrastructure companies
throughout the world. The remainder of the Infrastructure Portfolio's assets may
be invested in debt securities issued by infrastructure companies and/ or equity
and debt securities of companies outside of the infrastructure industries which,
in the opinion of G.T. Capital, stand to benefit from developments in the
infrastructure industries. See "Investment Objective and Policies."
The Natural Resources Fund seeks its investment objective by investing all of
its investable assets in the Natural Resources Portfolio, that, in turn,
normally invests at least 65% of its total assets in common and preferred stock
and warrants to acquire such securities issued by companies throughout the world
which own, explore or develop natural resources and other basic commodities, or
supply goods and services to such companies. The remainder of the Portfolio's
assets may be invested in debt securities issued by such companies and/or equity
and debt securities of companies outside of the natural resource industries,
which, in the opinion of G.T. Capital, stand to benefit from developments in
natural resource industries. See "Investment Objective and Policies."
The Consumer Products and Services Fund seeks its investment objective by
investing all of its investable assets in the Consumer Products and Services
Portfolio, that, in turn, normally invests at least 65% of its total assets in
common and preferred stocks and warrants to acquire such securities issued by
consumer products and services companies throughout the world. The remainder of
the Consumer Products and Services Portfolio's assets may be invested in debt
securities issued by consumer products and services companies and/ or in equity
and debt securities of companies outside of the consumer products and services
industries, which, in the opinion of G.T. Capital, stand to benefit from
developments in the consumer products and services industries. See "Investment
Objective and Policies."
The Health Care Fund normally invests at least 65% of its total assets in common
and preferred stocks and warrants to acquire such securities issued by health
care companies throughout the world which, in the opinion of G.T. Capital, have
high potential for long-term capital growth. The remainder of the Health Care
Fund's assets may be invested in debt securities issued by health care companies
and/or equity and debt securities of companies outside of the health care
industry which, in the opinion of G.T. Capital, stand to benefit from
developments in the health care industry. The Fund may invest up to 35% of its
total assets in debt securities, including debt securities convertible into
equity, when doing so presents a favorable opportunity for potential capital
appreciation in the determination of G.T. Capital. See "Investment Objective and
Policies."
The Telecommunications Fund normally invests at least 65% of its total assets in
common and preferred stocks and warrants to acquire such securities issued by
telecommunications companies throughout the world. The remainder of the
Telecommunications Fund's assets may be invested in debt securities issued by
telecommunications companies and/or equity and debt securities of companies
outside of the telecommunications industry which, in G.T. Capital's judgment,
stand to benefit from developments in the telecommunications industry. See
"Investment Objective and Policies."
G.T. Capital believes that a portfolio of the securities of companies operating
in the sectors described above located throughout the world presents greater
potential for long-term capital growth than a portfolio comprised solely of the
securities of U.S. issuers.
INVESTMENT TECHNIQUES AND RISK FACTORS. Each Theme Portfolio may engage in
certain foreign currency, options and futures transactions to attempt to hedge
against the overall level of investment and currency risk associated with its
present or planned investments.
For temporary defensive purposes, each Theme Portfolio may hold U.S. or foreign
currency and/or invest any portion of its assets in debt securities or high
quality money market instruments of U.S. or foreign issuers. Each Theme
Portfolio also may hold cash and invest in high quality foreign or domestic
money market instruments pending
Prospectus Page 6
<PAGE>
G.T. GLOBAL THEME FUNDS
PROSPECTUS SUMMARY
(Continued)
- --------------------------------------------------------------------------------
investment of proceeds from new sales of Fund shares, or to meet its ordinary
daily cash needs. See "Investment Objective and Policies" for a more complete
discussion of the Theme Portfolios' investment policies.
Each Theme Portfolio may borrow an amount up to 33 1/3% of its total assets in
order to meet redemption requests. This may cause greater fluctuation in the
value of a Fund's shares than would be the case if the Theme Portfolios did not
borrow, but also may enable the Theme Portfolios to retain favorable securities
positions rather than liquidating such positions to meet redemption needs. The
Theme Portfolios also are authorized to lend securities if doing so represents a
favorable investment opportunity. See "Investment Objective and Policies --
Other Policies."
The Financial Services Portfolio, Health Care Fund and Telecommunications Fund
may each invest up to 5%, and the Infrastructure Portfolio, Natural Resources
Portfolio and Consumer Products and Services Portfolio may each invest up to
20%, of its total assets in debt securities rated below investment grade, which
may include (i) corporate debt securities and (ii) debt instruments issued by
governments whose debt is unrated. Investments of this type are subject to a
greater risk of loss of principal and interest. See "Investment Objective and
Policies -- Other Policies."
There is no assurance that the Funds or the Portfolios will achieve their
investment objective. Each Fund's net asset value will fluctuate, reflecting
fluctuations in the market value of its securities holdings. The Theme
Portfolios normally invest in a substantial number of issuers, and G.T. Capital
believes that each Theme Portfolio's policy of concentrating its investments in
its particular sector companies enables each Theme Portfolio to take advantage
of the potential for long-term growth presented by such companies. However, this
policy may cause the value of the Funds' shares to fluctuate more than if it
invested in a greater number of industries. The companies in each such industry
are subject to extensive government regulation; this and other factors could
affect the value of the Funds' shares. See "Risk Factors."
Investments in foreign securities involve risks relating to political and
economic developments abroad and the differences between the regulations to
which U.S. and foreign issuers are subject. Individual foreign economies also
may differ favorably or unfavorably from the U.S. economy. Changes in foreign
currency exchange rates will affect the Funds' 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. The Theme Portfolios' participation in
the currency, options and futures markets involves certain risks and transaction
costs. See "Risk Factors."
Investors should review the investment objective and policies of the Theme
Portfolios carefully and consider their ability to assume these and other risks
involved in purchasing shares of the particular Fund.
EXPENSES. The Financial Services Fund, Infrastructure Fund, Natural Resources
Fund and Consumer Products and Services Fund each pays administration fees
directly to G.T. Capital at an annualized rate of 0.25% of that Fund's average
daily net assets. In addition, each such Fund bears its pro rata portion of the
investment management and administration fees paid by its corresponding
Portfolio to G.T. Capital. The Financial Services Portfolio, Infrastructure
Portfolio, Natural Resources Portfolio and Consumer Products and Services
Portfolio each pays such fees, based on the average daily net assets of that
Portfolio, at the annualized rate of .725% on the first $500 million, .70% on
the next $500 million, .675% on the next $500 million, and .65% on all amounts
thereafter.
The Health Care Fund and Telecommunications Fund each pays G.T. Capital
investment management and administration fees, based on the average daily net
assets of that 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 all
amounts thereafter.
As each Fund's distributor, G.T. Global collects the sales charges imposed on
purchases of Class A shares, and reallows all or a portion of such charges to
brokers that have made such sales. In addition,
Prospectus Page 7
<PAGE>
G.T. GLOBAL THEME FUNDS
PROSPECTUS SUMMARY
(Continued)
- --------------------------------------------------------------------------------
G.T. Global collects any contingent deferred sales charges that may be imposed
on certain redemptions of Class A shares and on redemptions of Class B shares.
G.T. Global also pays broker/dealers upon their sales of Class B shares; and
pays broker/dealers and other financial institutions ongoing payments for
servicing shareholder accounts and for sales efforts.
Pursuant to a distribution plan adopted in accordance with Rule 12b-1 under the
Investment Company Act of 1940, as amended ("1940 Act"), with respect to its
Class A shares, each 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 that Fund's Class A
shares as reimbursement for its 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 that
Fund's Class A shares, less any amounts paid by the Fund as the aforementioned
service fee for its expenditures incurred in providing services as distributor.
Pursuant to a separate distribution plan adopted in accordance with Rule 12b-1
under the 1940 Act with respect to its Class B shares, each 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 Class B shares for its 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 its Class
B shares as reimbursement for its expenditures incurred in providing services as
distributor.
Each Theme Portfolio pays all expenses not assumed by G.T. Capital, G.T. Global
or other agents. G.T. Capital and G.T. Global have undertaken to limit each
Theme Portfolio's expenses (exclusive of brokerage commissions, taxes, interest
and extraordinary expenses) to the annual rate of 2.40% and 2.90% of the average
daily net assets of the Funds' Class A and Class B shares, respectively. See
"Management."
Prospectus Page 8
<PAGE>
G.T. GLOBAL THEME FUNDS
PROSPECTUS SUMMARY
(Continued)
- --------------------------------------------------------------------------------
SUMMARY OF INVESTOR COSTS. The expenses and maximum transaction costs associated
with investing in the Class A and Class B shares of the Funds and the aggregate
annual operating expenses for the Funds and the Portfolios are reflected in the
following tables*+:
<TABLE>
<CAPTION>
G.T. GLOBAL
G.T. GLOBAL G.T. GLOBAL FINANCIAL
HEALTH CARE TELECOMMUNICATIONS SERVICES
FUND FUND FUND
----------------- ----------------- -----------------
CLASS A CLASS B CLASS A CLASS B CLASS A CLASS B
------- ------- ------- ------- ------- -------
SHAREHOLDER TRANSACTION COSTS:
<S> <C> <C> <C> <C> <C> <C>
Maximum sales charge on purchases of shares
(% of offering price)................................. 4.75% None 4.75% None 4.75% None
Sales charges on reinvested distributions to
shareholders.......................................... None None None None None None
Deferred sales charges.................................. None 5.00% None 5.00% None 5.00%
Redemption charges...................................... None None None None None None
Exchange fees:
-- On first four exchanges each year................ None None None None None None
-- On each additional exchange...................... $7.50 $7.50 $7.50 $7.50 $7.50 $7.50
ANNUAL FUND OPERATING EXPENSES:
(AS A % OF AVERAGE NET ASSETS)
Investment management and administration fees (after
reimbursement)........................................ 0.98% 0.98% 0.93% 0.93% 0.00% 0.00%
12b-1 service and distribution fees..................... 0.50% 1.00% 0.50% 1.00% 0.50% 1.00%
Other expenses (after reimbursements)................... 0.50% 0.50% 0.37% 0.37% 1.90% 1.90%
------- ------- ------- ------- ------- -------
Total Fund Operating Expenses (after reimbursements).... 1.98% 2.48% 1.80% 2.30% 2.40% 2.90%
------- ------- ------- ------- ------- -------
------- ------- ------- ------- ------- -------
</TABLE>
<TABLE>
<CAPTION>
G.T. GLOBAL
G.T. GLOBAL G.T. GLOBAL CONSUMER PRODUCTS
INFRASTRUCTURE NATURAL RESOURCES AND
FUND FUND SERVICES FUND
----------------- ----------------- -----------------
CLASS A CLASS B CLASS A CLASS B CLASS A CLASS B
------- ------- ------- ------- ------- -------
SHAREHOLDER TRANSACTION COSTS:
<S> <C> <C> <C> <C> <C> <C>
Maximum sales charge on purchases of shares
(% of offering price).................... 4.75% None 4.75% None 4.75% None
Sales charges on reinvested distributions to
shareholders............................. None None None None None None
Deferred sales charges...................... None 5.00% None 5.00% None 5.00%
Redemption charges.......................... None None None None None None
Exchange fees:
-- On first four exchanges each year.... None None None None None None
-- On each additional exchange.......... $7.50 $7.50 $7.50 $7.50 $7.50 $7.50
ANNUAL FUND OPERATING EXPENSES:
(AS A % OF AVERAGE NET ASSETS)
Investment management and administration
fees (after reimbursement)............... 0.04% 0.04% 0.00% 0.00% 0.98% 0.98%
12b-1 service and distribution fees......... 0.50% 1.00% 0.50% 1.00% 0.50% 1.00%
Other expenses (after reimbursements)....... 1.86% 1.86% 1.90% 1.90% 0.80% 0.80%
------- ------- ------- ------- ------- -------
Total Fund Operating Expenses (after
reimbursements).......................... 2.40% 2.90% 2.40% 2.90% 2.28% 2.78%
------- ------- ------- ------- ------- -------
------- ------- ------- ------- ------- -------
</TABLE>
- --------------
Sales charge waivers are available for Class A and Class B shares, and reduced
sales charge purchase plans are available for Class A shares. The maximum 5%
contingent deferred sales charge on Class B shares applies to redemptions during
the first year after purchase. The charge generally declines by 1% annually
thereafter, reaching zero after six years. See "How to Invest."
Prospectus Page 9
<PAGE>
G.T. GLOBAL THEME FUNDS
PROSPECTUS SUMMARY
(Continued)
- --------------------------------------------------------------------------------
HYPOTHETICAL EXAMPLE OF EFFECT OF EXPENSES*:
An investor would have directly or indirectly paid the following expenses at the
end of the periods shown on a $1,000 investment in the Funds, assuming a 5%
annual return:
<TABLE>
<CAPTION>
G.T. GLOBAL G.T. GLOBAL
HEALTH CARE
FUND (1) TELECOMMUNICATIONS FUND (1)
---------------------------- ----------------------------
ONE THREE FIVE TEN ONE THREE FIVE TEN
YEAR YEARS YEARS YEARS YEAR YEARS YEARS YEARS
---- ----- ----- ----- ---- ----- ----- -----
Class A Shares (1).................... $67 $107 $149 $265 $66 $102 $140 $247
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Class B Shares
Assuming a complete redemption at
end of period (2).................. $75 $106 $150 $278 $73 $101 $141 $260
Assuming no redemption.............. $25 $ 76 $130 $278 $23 $ 71 $121 $260
<CAPTION>
G.T. GLOBAL
FINANCIAL SERVICES
FUND (2)
----------------------------
ONE THREE FIVE TEN
YEAR YEARS YEARS YEARS
---- ----- ----- -----
Class A Shares (1).................... $72 $119 $169 $306
<S> <C> <C> <C> <C>
Class B Shares
Assuming a complete redemption at
end of period (2).................. $79 $119 $171 $319
Assuming no redemption.............. $29 $ 89 $151 $319
</TABLE>
<TABLE>
<CAPTION>
G.T. GLOBAL
CONSUMER
G.T. GLOBAL G.T. GLOBAL PRODUCTS AND
INFRASTRUCTURE NATURAL RESOURCES SERVICES
FUND (2) FUND (2) FUND
---------------------------- ---------------------------- ------------
ONE THREE FIVE TEN ONE THREE FIVE TEN ONE THREE
YEAR YEARS YEARS YEARS YEAR YEARS YEARS YEARS YEAR YEARS
---- ----- ----- ----- ---- ----- ----- ----- ---- -----
Class A Shares (1)............................. $72 $119 $169 $306 $72 $119 $169 $306 $70 $116
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Class B Shares
Assuming a complete redemption at end of
period (2).................................. $79 $119 $171 $319 $79 $119 $171 $319 $78 $115
Assuming no redemption....................... $29 $ 89 $151 $319 $29 $ 89 $151 $319 $28 $ 85
<FN>
- ------------------
(1) Assumes payment of maximum sales charge by investor.
(2) Assumes deduction of maximum applicable contingent deferred sales charge.
+ The Funds are authorized to offer Advisor Class shares to certain
categories of investors. See "Alternative Purchase Plan." Advisor Class
shares are not subject to a distribution or service fee. "Total Fund
Operating Expenses" for the Advisor Class shares are estimated to
approximate 1.48% for the Health Care Fund, 1.30% for the
Telecommunications Fund, 1.90% for the Financial Services Fund, 1.78% for
the Consumer Products and Services Fund, 1.90% for the Infrastructure Fund,
and 1.90% for the Natural Resources Fund.
* THESE TABLES ARE INTENDED TO ASSIST INVESTORS IN UNDERSTANDING THE VARIOUS
COSTS AND EXPENSES ASSOCIATED WITH INVESTING IN THE FUNDS. Expenses for the
Health Care Fund and Telecommunications Fund are based on the Funds' fiscal
year ended October 31, 1994, while the expenses for the Financial Services
Fund, Infrastructure Fund and Natural Resources Fund and their
corresponding Portfolios are after expense reimbursements and are based on
the fiscal period May 31, 1994 (commencement of operations) to October 31,
1994. Because the Consumer Products and Services Fund and its corresponding
Portfolio commenced operations only on December 30, 1994, "Other expenses"
are based on estimated amounts for the first year of operations of such
Fund and its Portfolio. Long-term shareholders may pay more than the
economic equivalent of the maximum front-end sales charge permitted by the
National Association of Securities Dealers, Inc. ("NASD") rules regarding
investment companies. "Other expenses" include custody, transfer agency,
legal, audit and other operating expenses. "Other expenses" may be reduced
to the extent that (i) certain broker/dealers executing the Health Care
Fund, Telecommunications Fund or the Portfolios' portfolio transactions pay
all or a portion of custodian fees 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 Health Care Fund,
Telecommunications Fund or the Portfolios. For the fiscal year ended
October 31, 1994, without such reductions, "Other expenses" for Health Care
Fund, Telecommunications Fund, Financial Services Fund and its
corresponding Portfolio, Infrastructure Fund and its corresponding
Portfolio, Natural Resources Fund and its corresponding Portfolio would
have been 0.52%, 0.41%, 1.94%, 1.86% and 1.92%, respectively, for Class A
shares and 0.52%, 0.41%, 1.94%, 1.86% and 1.92%, respectively, for Class B
shares. See "Management" herein and in the Statement of Additional
Information for more information. THE "HYPOTHETICAL EXAMPLE" SET FORTH
ABOVE IS NOT A REPRESENTATION OF PAST OR FUTURE EXPENSES. THE FUNDS' AND
THE PORTFOLIOS' ACTUAL EXPENSES MAY BE MORE OR LESS THAN THOSE SHOWN.
Without reimbursements, "Investment management and administration fees,"
"Other expenses" and "Total Fund Operating Expenses" for Class A shares of
the Financial Services Fund and its corresponding Portfolio would have been
0.975%, 8.85% and 10.32%, respectively, and the amount of expenses an
investor would pay, assuming redemption after one, three, five and ten
years, would be $151, $331, $493 and $829, respectively. Without
reimbursements, "Investment management and administration fees," "Other
expenses" and "Total Fund Operating Expenses" for Class B shares of the
Financial Services Fund and its
</TABLE>
Prospectus Page 10
<PAGE>
G.T. GLOBAL THEME FUNDS
PROSPECTUS SUMMARY
(Continued)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Portfolio would have been 0.975%, 8.85% and 16.52%, respectively, and the
amount of expenses an investor would pay, assuming redemption after one,
three, five and ten years would be $158, $336, $502, and $838,
respectively. Assuming no redemption, the amount of expenses an investor
would pay after one, three, five and ten years, would be $108, $306, $482
and $838, respectively.
Without reimbursements, "Investment management and administration fees,"
"Other expenses" and "Total Fund Operating Expenses" for Class A shares of
the Infrastructure Fund and its Portfolio would have been 0.975%, 1.80% and
3.28%, respectively, and the amount of expenses an investor would pay,
assuming redemption after one, three, five and ten years, would be $80,
$144, $211 and $387, respectively. Without reimbursements, "Investment
management and administration fees," "Other expenses" and "Total Fund
Operating Expenses" for Class B shares of Infrastructure Fund and its
Portfolio would have been 0.975%, 1.80% and 3.78%, respectively, and the
amount of expenses an investor would pay, assuming redemption after one,
three, five and ten years, would be $88, $145, $214 and $399, respectively.
Assuming no redemption, the amount of expenses an investor would pay after
one, three, five and ten years, would be $38, $115, $194 and $399,
respectively.
Without reimbursements, "Investment management and administration fees,"
"Other expenses" and "Total Fund Operating Expenses" for Class A shares of
Natural Resources Fund and its Portfolio would have been 0.975%, 2.90% and
4.38%, respectively, and the amount of expenses an investor would pay,
assuming redemption after one, three, five and ten years, would be $91,
$176, $261 and $479, respectively. Without reimbursements, "Investment
management and administration fees," "Other expenses" and "Total Fund
Operating Expenses" for Class B shares of Natural Resources Fund and its
Portfolio would have been 0.975%, 2.90% and 4.88%, respectively, and the
amount of expenses an investor would pay, assuming redemption after one,
three, five and ten years would be $99, $177, $265, and $491, respectively.
Assuming no redemption, the amount of expenses an investor would pay after
one, three, five and ten years would be $49, $147, $245 and $491,
respectively.
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 Funds' or the Portfolios'
projected or actual performance.
The Annual Fund Operating Expenses for the Consumer Products and Services
Fund and its corresponding Portfolio are annualized projections based upon
current administration fees for the Fund and management and administration
fees for the Portfolio and estimated amounts for Other expenses. The Board
of Directors of the Company believes that the aggregate per share expenses
of the Financial Services Fund, Infrastructure Fund, Natural Resources Fund
and Consumer Products and Services Fund and each of their corresponding
Portfolios will be approximately equal to the expenses such Fund would
incur if its assets were invested directly in the type of securities being
held by its corresponding Portfolio. If investors other than such Fund
invest in its corresponding Portfolio, such Funds could achieve economies
of scale which could reduce expenses.
</TABLE>
Prospectus Page 11
<PAGE>
G.T. GLOBAL THEME FUNDS
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
The tables below provide condensed financial information concerning income and
capital changes for one share of each class of shares of the 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 is also included in the Statement of Additional Information.
G.T. GLOBAL HEALTH CARE FUND
<TABLE>
<CAPTION>
CLASS B++
-------------------------
APRIL 1,
YEAR ENDED 1993
OCTOBER 31, TO OCTOBER
1994* 31, 1993*
----------- -----------
<S> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period............... $ 17.80 $ 15.59
----------- -----------
Income from investment operations:
Net investment income (loss)..................... (0.32) (0.14)
Net realized and unrealized gain (loss) on
investments..................................... 2.02 2.35
----------- -----------
Net increase (decrease) from investment
operations...................................... 1.70 2.21
----------- -----------
Distributions:
Net investment income............................ (0.00) (0.00)
Net realized gain on investments................. (0.00) (0.00)
In excess of net realized gain on investments.... (0.04) (0.00)
----------- -----------
Total distributions............................ (0.04) (0.00)
----------- -----------
Net asset value, end of period..................... $ 19.46 $ 17.80
----------- -----------
----------- -----------
Total investment return (c)........................ 9.55% 14.2%(a)
Ratios and supplemental data:
Net assets, end of period (in 000's)............... $39,100 $ 8,604
Ratio of net investment income (loss) to average
net assets........................................ (1.73)% (1.4)%(b)
Ratio of expenses to average net assets before
expense reductions................................ 2.50%
Ratio of expenses to average net assets............ 2.48% 2.5%(b)
Portfolio turnover rate +++........................ 64% 61%
<CAPTION>
CLASS A+
---------------------------------------------------------------
AUGUST 7,
1989
(COMMENCEMENT
OF
YEAR ENDED OCTOBER 31, OPERATIONS)
------------------------------------------------ TO OCTOBER
1994* 1993* 1992 1991 1990 31, 1989
-------- -------- -------- -------- -------- -------------
<S> <C> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period............... $ 17.86 $ 17.44 $ 19.29 $ 12.83 $ 11.83 $ 11.43
-------- -------- -------- -------- -------- -------------
Income from investment operations:
Net investment income (loss)..................... (0.22) (0.15) (0.18) 0.03 0.06 0.01
Net realized and unrealized gain (loss) on
investments..................................... 2.02 0.57 (1.53) 6.78 0.97 0.39
-------- -------- -------- -------- -------- -------------
Net increase (decrease) from investment
operations...................................... 1.80 0.42 (1.71) 6.81 1.03 0.40
-------- -------- -------- -------- -------- -------------
Distributions:
Net investment income............................ (0.00) (0.00) (0.00) (0.07) (0.03) (0.00)
Net realized gain on investments................. (0.00) (0.00) (0.14) (0.28) (0.00) (0.00)
In excess of net realized gain on investments.... (0.06) (0.00) (0.00) (0.00) (0.00) (0.00)
-------- -------- -------- -------- -------- -------------
Total distributions............................ (0.06) (0.00) (0.14) (0.35) (0.03) (0.00)
-------- -------- -------- -------- -------- -------------
Net asset value, end of period..................... $ 19.60 $ 17.86 $ 17.44 $ 19.29 $ 12.83 $ 11.83
-------- -------- -------- -------- -------- -------------
-------- -------- -------- -------- -------- -------------
Total investment return (c)........................ 10.11% 2.4% (8.9)% 54.2% 8.7% 3.5%(a)
Ratios and supplemental data:
Net assets, end of period (in 000's)............... $438,940 $461,113 $655,867 $552,897 $145,544 $49,903
Ratio of net investment income (loss) to average
net assets........................................ (1.23)% (0.9)% (1.0)% 0.2% 0.7% 3.2%(b)
Ratio of expenses to average net assets before
expense reductions................................ 2.00%
Ratio of expenses to average net assets............ 1.98% 2.0% 2.1% 2.0% 2.4% 2.5%(b)
Portfolio turnover rate +++........................ 64% 61% 30% 23% 34% 183%(b)
<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.
* These selected per share data were calculated based upon weighted average
shares outstanding during the period.
(a) Not annualized.
(b) Annualized.
(c) Total investment return does not include sales charges.
</TABLE>
Prospectus Page 12
<PAGE>
G.T. GLOBAL THEME FUNDS
G.T. GLOBAL TELECOMMUNICATIONS FUND
<TABLE>
<CAPTION>
CLASS B++
---------------------------------------
YEAR ENDED APRIL 1, 1993 TO
OCTOBER 31, 1994 (C) OCTOBER 31, 1993
-------------------- ----------------
Per Share Operating Performance:
<S> <C> <C>
Net asset value, beginning of period.................... $ 16.87 $ 12.68
----------- ----------------
Income from investment operations:
Net investment income (loss).......................... (0.10) 0.01
Net realized and unrealized gain (loss) on
investments.......................................... 1.17 4.18
----------- ----------------
Net increase (decrease) from investment operations.... 1.07 4.19
----------- ----------------
Distributions:
Net investment income................................. (0.01) (0.00)
Net realized gain on investments...................... (0.27) (0.00)
----------- ----------------
Total distributions................................. (0.28) (0.00)
----------- ----------------
Net asset value, end of period.......................... $ 17.66 $ 16.87
----------- ----------------
----------- ----------------
Total investment return (d)............................. 6.50% 33.0%(a)
Ratios and supplemental data:
Net assets, end of period (in 000's).................... $1,184,081 $455,335
Ratio of net investment income to average net assets.... (0.52)% 0.3%(b)
Ratio of expenses to average net assets before expense
reductions............................................. 2.34%
Ratio of expenses to average net assets................. 2.30% 2.5%(b)
Portfolio turnover rate+++.............................. 57% 41%
<CAPTION>
CLASS A+
-------------------------------------------------------------
JANUARY 27, 1992
(COMMENCEMENT
YEAR ENDED YEAR ENDED OF OPERATIONS) TO
OCTOBER 31, 1994 (C) OCTOBER 31, 1993 OCTOBER 31, 1992
-------------------- ---------------- -------------------
Per Share Operating Performance:
<S> <C> <C> <C>
Net asset value, beginning of period.................... $ 16.92 $ 11.16 $ 11.43
----------- ---------------- ----------
Income from investment operations:
Net investment income (loss).......................... (0.01) 0.08 0.14*
Net realized and unrealized gain (loss) on
investments.......................................... 1.17 5.83 (0.41)
----------- ---------------- ----------
Net increase (decrease) from investment operations.... 1.16 5.91 (0.27)
----------- ---------------- ----------
Distributions:
Net investment income................................. (0.01) (0.15) (0.00)
Net realized gain on investments...................... (0.27) (0.00) (0.00)
----------- ---------------- ----------
Total distributions................................. (0.28) (0.15) (0.00)
----------- ---------------- ----------
Net asset value, end of period.......................... $ 17.80 $ 16.92 $ 11.16
----------- ---------------- ----------
----------- ---------------- ----------
Total investment return (d)............................. 7.02% 53.6% (2.4)%(a)
Ratios and supplemental data:
Net assets, end of period (in 000's).................... $1,644,402 $1,223,340 $442,862
Ratio of net investment income to average net assets.... (0.02)% 0.8% 2.1%*(b)
Ratio of expenses to average net assets before expense
reductions............................................. 1.84%
Ratio of expenses to average net assets................. 1.80% 2.0% 2.3%*(b)
Portfolio turnover rate+++.............................. 57% 41% 4%(b)
<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 less than $0.01. Without such reimbursement, the annualized
expense ratio would have been 2.30% and the annualized ratio of net
investment income to average net assets would have been 2.04%.
(a) Not annualized.
(b) Annualized.
(c) These selected per share data were calculated based upon weighted average
shares outstanding during the period.
(d) Total investment return does not include sales charges.
</TABLE>
Prospectus Page 13
<PAGE>
G.T. GLOBAL THEME FUNDS
<TABLE>
<CAPTION>
G.T. GLOBAL G.T. GLOBAL
FINANCIAL SERVICES INFRASTRUCTURE
FUND FUND
---------------------------------------- ----------------------------------------
CLASS B CLASS A CLASS B CLASS A
------------------ -------------------- ------------------ --------------------
MAY 31, 1994 MAY 31, 1994 MAY 31, 1994 MAY 31, 1994
(COMMENCEMENT OF (COMMENCEMENT OF (COMMENCEMENT OF (COMMENCEMENT OF
OPERATIONS) TO OPERATIONS) TO OPERATIONS) TO OPERATIONS) TO
OCTOBER 31, 1994 OCTOBER 31, 1994 OCTOBER 31, 1994 OCTOBER 31, 1994
------------------ -------------------- ------------------ --------------------
<S> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period........ $ 11.43 $ 11.43 $ 11.43 $ 11.43
---------- ---------- ------------------ -----------
Income from investment operations:
Net investment income+.................... 0.00 0.02 (0.01) 0.01
Net realized and unrealized gain (loss) on
investments.............................. 0.17*** 0.17*** 1.03 1.03
---------- ---------- ------------------ -----------
Net increase (decrease) from investment
operations................................. 0.17 0.19 1.02 1.04
---------- ---------- ------------------ -----------
Net asset value, end of period.............. $ 11.60 $ 11.62 $ 12.45 $ 12.47
---------- ---------- ------------------ -----------
---------- ---------- ------------------ -----------
Total investment return (c)................. 1.49%(b) 1.66%(b) 8.92%(b) 9.10%(b)
Ratios and supplemental data:
Net assets, end of period
(in 000's)................................. $ 2,235 $ 3,175 $ 30,954 $ 23,615
Ratio of net investment income to average
net assets................................. 0.16%**(a) 0.66%*(a) (0.09)%**(a) 0.41%*(a)
Ratio of expenses
to average net assets
before expense reductions.................. 2.94% 2.44% 2.90% 2.40%
Ratio of expenses to average net assets..... 2.90%**(a) 2.40%*(a) 2.90%**(a) 2.40%*(a)
<CAPTION>
G.T. GLOBAL
NATURAL RESOURCES
FUND
----------------------------------------
CLASS B CLASS A
------------------ --------------------
MAY 31, 1994 MAY 31, 1994
(COMMENCEMENT OF (COMMENCEMENT OF
OPERATIONS) TO OPERATIONS) TO
OCTOBER 31, 1994 OCTOBER 31, 1994
------------------ --------------------
<S> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period........ $ 11.43 $ 11.43
------------------ ----------
Income from investment operations:
Net investment income+.................... 0.03 0.06
Net realized and unrealized gain (loss) on
investments.............................. 0.92 0.92
------------------ ----------
Net increase (decrease) from investment
operations................................. 0.95 0.98
------------------ ----------
Net asset value, end of period.............. $ 12.38 $ 12.41
------------------ ----------
------------------ ----------
Total investment return (c)................. 8.31%(b) 8.57%(b)
Ratios and supplemental data:
Net assets, end of period
(in 000's)................................. $ 13,404 $ 14,797
Ratio of net investment income to average
net assets................................. 2.13%**(a) 2.63%*(a)
Ratio of expenses
to average net assets
before expense reductions.................. 2.92% 2.42%
Ratio of expenses to average net assets..... 2.90%**(a) 2.40%*(a)
<FN>
- ------------------
* The annualized ratios of operating expenses and net investment income to
average net assets for Class A shares of Financial Services Fund,
Infrastructure Fund and Natural Resources Fund before reimbursement by G.T.
Capital Management, Inc. for the period ended October 31, 1994 would have
been 10.32% and (7.26)%; 3.28% and (0.47)%; and 4.38% and 0.65%,
respectively.
** The annualized ratios of operating expenses and net investment income to
average net assets for Class B shares of Financial Services Fund,
Infrastructure Fund and Natural Resources Fund before reimbursement by G.T.
Capital Management, Inc. for the period ended October 31, 1994 would have
been 10.82% and (7.76)%; 3.78% and (0.97)%; and 4.88% and 0.15%,
respectively.
*** The per share amount does not correspond with the net realized and
unrealized gain for the period due to the timing of the sales of Fund
shares and the amount of per share realized and unrealized gains and losses
at such time.
+ The net investment income per share before reimbursement by G.T. Capital
Management, Inc. for both classes of shares of Financial Services Fund,
Infrastructure Fund and Natural Resources Fund would have been reduced by
$0.23, $0.02 and $0.04, respectively.
(a) Annualized.
(b) Not annualized.
(c) Total investment return does not include sales charges.
</TABLE>
Prospectus Page 14
<PAGE>
G.T. GLOBAL THEME FUNDS
ALTERNATIVE PURCHASE PLAN
- --------------------------------------------------------------------------------
DIFFERENCES BETWEEN THE CLASSES. The primary distinction between the two classes
of each Fund's shares offered through this Prospectus lies in their sales charge
structures and ongoing expenses, as summarized below. Class A and Class B shares
of each Fund represent interests in the same portfolio of investments of that
Fund and have the same rights, except that each class bears the separate
expenses of its Rule 12b-1 distribution plan and has exclusive voting rights
with respect to such plan, and each class has a separate exchange privilege. See
"Management" and "How to Make Exchanges." Each class has distinct advantages and
disadvantages for different investors, and investors should choose the class
that better suits their circumstances and objectives.
Dividends and other distributions paid by each Fund with respect to its Class A
and Class B shares are calculated in the same manner and at the same time. The
per share dividends on Class B shares of each Fund will be lower than the per
share dividends on Class A shares of that Fund as a result of the higher service
and distribution fees applicable to Class B shares.
CLASS A SHARES. Class A shares of each Fund are sold at net asset value plus an
initial sales charge of up to 4.75% of the public offering price imposed at the
time of purchase. This initial sales charge is reduced or waived for certain
purchases. Purchases of $500,000 or more must be for Class A shares. Class A
shares of each Fund also bear annual service and distribution fees of up to
0.50% of the average daily net assets of that class.
CLASS B SHARES. Class B shares of each Fund are sold at net asset value with no
initial sales charge at the time of purchase. Therefore, the entire amount of an
investor's purchase payment is invested in that Fund. Class B shares bear annual
service and distribution fees of up to 1.00% of the average daily net assets of
that class, and 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. The higher
service and distribution fees paid by the Class B shares of each Fund should
cause that class to have a higher expense ratio and to pay lower dividends than
Class A shares of the Fund.
FACTORS TO CONSIDER IN CHOOSING A CLASS OF SHARES. In deciding which class of a
Fund to purchase, investors should consider the foregoing factors as well as the
following:
INTENDED HOLDING PERIOD. Over time, the cumulative expense of the 1.00% annual
service and distribution fees on the Class B shares of a Fund will approximate
or exceed the expense of the applicable 4.75% maximum initial sales charge plus
the 0.50% service and distribution fees on the Class A shares of a Fund. For
example, if net asset value remains constant, the Class B shares' aggregate
service and distribution fees would be equal to the Class A shares' initial
maximum sales charge and service and distribution fees approximately nine years
after purchase. Thereafter, Class B shares would bear higher expenses. Investors
who expect to maintain their investment in a Fund over the long-term but do not
qualify for a reduced initial sales charge might elect the Class A initial sales
charge alternative because the indirect expense to the shareholder of the
accumulated service and distribution fees on the Class B shares eventually will
exceed the initial sales charge paid by the shareholder plus the indirect
expense to the shareholder of the accumulated distribution fees of Class A
shares. Class B investors, however, enjoy the benefit of permitting all their
dollars to work from the time an investment is made. Any positive investment
return on this additional invested amount would partially or wholly offset the
higher annual expenses borne by Class B shares. Because the Funds' future
returns cannot be predicted, however, there can be no assurance that such a
positive return will be achieved.
Finally, Class B shareholders pay a contingent deferred sales charge if they
redeem during the first six years after purchase, unless a sales charge waiver
applies. Investors expecting to redeem during this period should consider the
cost of the applicable contingent deferred sales charge in addition to the
annual Class B service and distribution fees, as compared with the cost of the
applicable initial sales charge and annual service and distribution fees
applicable to the Class A shares.
Prospectus Page 15
<PAGE>
G.T. GLOBAL THEME FUNDS
The "Hypothetical Example of Effect of Expenses" under "Prospectus Summary"
shows for each Fund the cumulative expenses an investor would pay over time on a
hypothetical investment in each class of each Fund's shares, assuming an annual
return of 5%.
REDUCED SALES CHARGES. Class A share purchases over $50,000 and Class A share
purchases made under a Fund's reduced sales charge plans may be made at a
reduced initial sales charge. See "How to Invest" for a complete list of reduced
sales charges applicable to Class A purchases.
WAIVER OF SALES CHARGES. The entire initial sales charge on Class A shares of a
Fund may be waived for certain eligible purchasers and these purchasers' entire
purchase price would be immediately invested in that Fund. The contingent
deferred sales charge may be waived upon redemption of certain Class B shares of
a Fund. Investors eligible for complete initial sales charge waivers should
purchase Class A shares. See "How to Invest" for a complete list of initial
sales charge waivers applicable to Class A purchases and contingent deferred
sales charge waivers applicable to Class B purchases. A 1% contingent deferred
sales charge is imposed on certain redemptions of Class A shares on which no
initial sales charge was assessed.
Investors should understand that the contingent deferred sales charge on the
Class B shares and the initial sales charge on the Class A shares are both
intended to compensate G.T. Global and selling broker/dealers for their
distribution services. Broker/dealers may receive different levels of
compensation for selling a particular class of shares of the Funds.
ADVISOR CLASS SHARES. Advisor Class shares may be offered through a separate
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; (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.
See "How to Invest," "How to Redeem Shares," and "Management" for a more
complete description of the initial and contingent deferred sales charges,
service fees and distribution fees for Class A and Class B shares of each Fund
and "Dividends, Other Distributions and Federal Income Taxation," and "Valuation
of Shares" for other differences between these two classes.
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVE
AND POLICIES
- --------------------------------------------------------------------------------
FINANCIAL SERVICES FUND
The Financial Services Fund's investment objective is long-term capital growth.
The Financial Services Fund seeks its objective by investing all of its
investable assets in the Financial Services Portfolio, that, in turn invests
primarily in equity securities of companies throughout the world that operate in
the financial services industry. The Financial Services Portfolio's investment
objective is identical to that of the Financial Services Fund. The Financial
Services Portfolio invests in financial services companies which, in the opinion
of G.T. Capital, have potential for above average, long-term growth in sales and
earnings on a sustained basis. There is no assurance that the Financial Services
Fund or the Financial Services Portfolio will achieve its investment objective.
At least 65% of the Financial Services Portfolio's total assets normally will be
invested in common and preferred stocks and warrants to acquire such securities,
issued by companies in the financial services industry. A "financial services"
company is an entity in which (i) at least 50% of either the revenues or
earnings was derived from financial services activities, or (ii) at least 50% of
the assets
Prospectus Page 16
<PAGE>
G.T. GLOBAL THEME FUNDS
was devoted to such activities, based on the company's most recent fiscal year.
The remainder of the Financial Services Portfolio's assets may be invested in
debt securities issued by financial services companies and/or equity and debt
securities of companies outside of the financial services industry, which, in
the opinion of G.T. Capital, stand to benefit from developments in the financial
services industry.
In analyzing companies for investment by the Financial Services Portfolio, G.T.
Capital ordinarily looks for several of the following characteristics: above-
average per share earnings growth; high return on invested capital; a healthy
balance sheet; sound financial and accounting policies and overall financial
strength; strong competitive advantages; efficient service; pricing flexibility;
strong management; and general operating characteristics which will enable the
companies to compete successfully in their respective markets.
GLOBAL FINANCIAL SERVICES INDUSTRY INVESTMENT. Examples of financial services
companies include those providing financial services to consumers and industry
including the following and their foreign equivalents: commercial banks and
savings institutions and loan associations and their holding companies; consumer
and industrial finance companies; diversified financial services companies;
investment banking; insurance brokerages; securities brokerage and investment
advisory companies; real estate-related companies; leasing companies; and a
variety of firms in all segments of the insurance field such as multi-line,
property and casualty and life insurance and insurance holding companies.
G.T. Capital believes an accelerating rate of global economic interdependence
will lead to significant growth in the demand for financial services. In
addition, in G.T. Capital's view, as the industry evolves, opportunities will
emerge for those companies positioned for the future. Thus, G.T. Capital expects
that banking and related financial institution consolidation in the developed
countries, increased demand for retail borrowing in developing countries, a
growing need for international trade-based financing, a rising demand for
sophisticated risk management, the proliferating number of liquid securities
markets around the world, and larger concentrations of investable assets should
lead to growth in financial service companies that are positioned for the
future.
INFRASTRUCTURE FUND
The Infrastructure Fund's investment objective is long-term capital growth. The
Infrastructure Fund seeks its objective by investing all of its investable
assets in the Infrastructure Portfolio, that, in turn, invests primarily in
equity securities of companies throughout the world that design, develop or
provide products and services significant to a country's infrastructure. The
Infrastructure Portfolio's investment objective is identical to that of the
Infrastructure Fund. The Infrastructure Portfolio invests in infrastructure
companies which, in the opinion of G.T. Capital, have potential for above
average, long-term growth in sales and earnings on a sustained basis. There is
no assurance that the Infrastructure Fund or the Infrastructure Portfolio will
achieve its investment objective.
At least 65% of the Infrastructure Portfolio's total assets normally will be
invested in common stocks and preferred stocks and warrants to acquire such
securities issued by infrastructure companies. An "infrastructure" company is an
entity in which (i) at least 50% of either the revenues or earnings was derived
from infrastructure activities, or (ii) at least 50% of the assets was devoted
to such activities, based on the company's most recent fiscal year. The
remainder of the Infrastructure Portfolio's assets may be invested in debt
securities issued by infrastructure companies and/or equity and debt securities
of companies outside of the infrastructure industries, which, in the opinion of
G.T. Capital, stand to benefit from developments in the infrastructure
industries.
In analyzing companies for investment by the Infrastructure Portfolio, G.T.
Capital ordinarily looks for several of the following characteristics: above-
average per share earnings growth; high return on invested capital; a healthy
balance sheet; sound financial and accounting policies and overall financial
strength; strong competitive advantages; effective research and product
development and marketing; development of new technologies; efficient service;
pricing flexibility; strong management; and general operating characteristics
that will enable the companies to compete successfully in their respective
markets.
GLOBAL INFRASTRUCTURE INDUSTRIES INVESTMENT. For purposes of the Infrastructure
Portfolio's policy of investing at least 65% of its total assets in the
securities of infrastructure companies, the companies in which the
Infrastructure Portfolio will principally invest will be those engaged in
designing, developing or providing the following products and services:
electricity production; oil, gas, and coal
Prospectus Page 17
<PAGE>
G.T. GLOBAL THEME FUNDS
exploration, development, production and distribution; water supply, including
water treatment facilities; nuclear power and other alternative energy sources;
transportation, including the construction or operation of transportation
systems; steel, concrete, or similar types of products; communications equipment
and services (including equipment and services for both data and voice
transmission); mobile communications and cellular radio/paging; emerging
technologies combining telephone, television and/or computer systems; and other
products and services, which, in G.T. Capital's judgment, constitute services
significant to the development of a country's infrastructure.
In addition, long-term growth rates of certain foreign countries' economies may
be substantially higher than those of the U.S. economy. An integral aspect of
the foreign countries' economies may be the development or improvement of their
infrastructure.
G.T. Capital believes that a country's infrastructure is one key to the
long-term success of that country's economy. G.T. Capital believes that adequate
energy, transportation, water, and communications systems are essential elements
for long-term economic growth. G.T. Capital believes that many developing
nations, especially in Asia and Latin America, plan to make significant
expenditures to the development of their infrastructure in the coming years,
which is expected to facilitate increased levels of services and manufactured
goods.
In the developed countries of North America, Europe, Japan and the south
Pacific, G.T. Capital expects that the replacement and upgrade of transportation
and communications systems should stimulate growth in the industries of those
countries. In G.T. Capital's view, deregulation of telecommunications and
electric and gas utilities in many countries is promoting significant changes in
these industries.
G.T. Capital believes that strong economic growth in developing countries and
infrastructure replacement, upgrade, and deregulation in more developed
countries provide an environment for favorable investment opportunities in
infrastructure companies worldwide.
NATURAL RESOURCES FUND
The Natural Resources Fund's investment objective is long-term capital growth.
The Natural Resources Fund seeks its objective by investing all of its
investable assets in the Natural Resources Portfolio, that, in turn, invests
primarily in equity securities of companies throughout the world that own,
explore or develop natural resources and other basic commodities, or supply
goods and services to such companies. The Natural Resources Portfolio's
investment objective is identical to that of the Natural Resources Fund. The
Natural Resources Portfolio expects to principally invest in those natural
resource companies that own, explore or develop energy sources; ferrous and
non-ferrous metals, strategic metals and precious metals, chemicals, forest
products, foodstuffs, refined products, such as steel and other basic
commodities, which, in G.T. Capital's opinion, historically have been produced
and marketed profitably during periods of improving supply and demand
fundamentals and rising inflation. The Natural Resources Portfolio invests in
natural resource companies which, in the opinion of G.T. Capital, have potential
for above average, long-term growth in sales and earnings. There is no assurance
that the Natural Resources Fund or the Natural Resources Portfolio will achieve
its investment objective.
At least 65% of the Natural Resources Portfolio's total assets will normally be
invested in common stock and preferred stock, and warrants to acquire such
securities, issued by natural resource companies. A "natural resource" company
is an entity in which (i) at least 50% of either the revenues or earnings was
derived from natural resource activities, or (ii) at least 50% of the assets was
devoted to such activities, based upon the company's most recent fiscal year.
The remainder of the Natural Resources Portfolio's assets may be invested in
debt securities issued by natural resource companies and/or equity and debt
securities of companies outside of the natural resource industries, which, in
the opinion of G.T. Capital, stand to benefit from developments in the natural
resource industries.
The Natural Resources Portfolio may invest in securities of companies in those
natural resource industries and commodity groups which, in G.T. Capital's
opinion, may perform well during periods of rising inflation. In analyzing such
companies for possible investment by the Natural Resources Portfolio, G.T.
Capital ordinarily looks for several of the following characteristics:
above-average per share earnings growth; high return on invested capital; a
healthy balance sheet; sound financial and accounting policies and overall
financial strength; strong competitive advantages; development of new
technologies; efficient service; strong management; and general operating
characteristics that
Prospectus Page 18
<PAGE>
G.T. GLOBAL THEME FUNDS
will enable the companies to compete successfully in their respective markets.
GLOBAL NATURAL RESOURCE INDUSTRIES INVESTMENT. The natural resource industries
are comprised of a variety of companies. For purposes of the Natural Resources
Portfolio's policy of investing at least 65% of its total assets in the
securities of natural resource companies, the companies in which the Natural
Resources Portfolio will principally invest will be those which own, explore or
develop: energy sources (such as oil, gas and coal); ferrous and non-ferrous
metals (such as iron, aluminum, copper, nickel, zinc and lead), strategic metals
(such as uranium and titanium) and precious metals (such as gold, silver and
platinum); chemicals; forest products (such as timber, coated and uncoated tree
sheet, pulp and newsprint); other basic commodities (such as foodstuffs);
refined products (such as chemicals and steel) and service companies that sell
to these producers and refiners; and other products and services, which, in G.T.
Capital's opinion are significant to the ownership and development of natural
resources and other basic commodities.
G.T. Capital will allocate the Natural Resources Portfolio's investments among
those natural resource companies depending on its assessment of their long-term
growth potential. In assessing these companies' long-term growth potential, G.T.
Capital will evaluate, among other factors, their capabilities for expanded
exploration and production, superior exploration programs and production
techniques and facilities, current inventories, expected production and demand
levels and the potential to accumulate new resources.
G.T. Capital believes that the liberalization of formerly socialist economies
will bring about dramatic changes in both the supply and demand for natural
resources. In addition, rapid industrialization in developing countries of Asia
and Latin America are generating new demands for industrial materials that are
affecting world commodities markets. G.T. Capital believes these changes are
likely to create investment opportunities that benefit from new sources of
supply and/or from changes in commodities prices.
G.T. Capital believes that investments in natural resource industries offer an
opportunity to protect wealth against the capital-eroding effects of inflation.
During periods of accelerating inflation or currency uncertainty, worldwide
investment demand for natural resources, particularly precious metals, tends to
increase, and during periods of disinflation or currency stability, it tends to
decrease. G.T. Capital believes that rising commodity prices and increasing
worldwide industrial production may favorably affect share prices of natural
resource companies, and investments in such companies can offer excellent
opportunities to offset the effects of inflation.
CONSUMER PRODUCTS AND SERVICES FUND
The Consumer Products and Services Fund's investment objective is long-term
capital growth. The Consumer Products and Services Fund seeks its objective by
investing all of its investable assets in the Consumer Products and Services
Portfolio, that, in turn, invests primarily in equity securities of companies
throughout the world that manufacture, market, retail or distribute consumer
products and services. The Consumer Products and Services Portfolio's investment
objective is identical to that of the Consumer Products and Services Fund. The
Consumer Products and Services Portfolio invests in consumer products and
services companies which, in the opinion of G.T. Capital, have potential for
above average, long-term growth in sales and earnings on a sustained basis.
There is no assurance that the Consumer Products and Services Fund or the
Consumer Products and Services Portfolio will achieve its investment objective.
At least 65% of the Fund's total assets normally will be invested in common
stocks and preferred stocks and warrants to acquire such securities issued by
companies in the consumer products and services industries. A "consumer products
or services" company is an entity in which (i) at least 50% of either the
revenues or earnings was derived from activities relating to consumer products
or services or (ii) at least 50% of the assets was devoted to such activities,
based on the company's most recent fiscal year. The remainder of the Consumer
Products and Services Portfolio's assets may be invested in debt securities
issued by consumer products or services companies and/or equity and debt
securities of companies outside the consumer products or services industries,
which, in the opinion of G.T. Capital, stand to benefit from developments in
such industries.
In analyzing companies for investment by the Consumer Products and Services
Portfolio, G.T. Capital ordinarily looks for several of the following
characteristics: above-average per share earnings growth; high return on
invested capital; a healthy balance sheet; sound financial and accounting
policies and overall financial strength; strong management; strong and growing
market
Prospectus Page 19
<PAGE>
G.T. GLOBAL THEME FUNDS
share; pricing flexibility; effective product development and marketing;
excellent products and services; superior perceived value; and general operating
characteristics which will enable the companies to compete successfully in their
respective markets.
CONSUMER PRODUCTS AND SERVICES INDUSTRIES INVESTMENT. The consumer products and
services industries are composed of a variety of companies. For the purposes of
the Consumer Products and Services Portfolio's policy of investing at least 65%
of its total assets in the securities of consumer products and services
companies, the companies in which the Consumer Products and Services Portfolio
will principally invest will be those that manufacture, market, retail, or
distribute: (i) durable goods, such as homes, household goods, automobiles,
boats, furniture and appliances, and computers; (ii) non-durable goods, such as
food and beverages and apparel; (iii) media, entertainment, broadcasting,
publishing and sports-related goods and services, such as television and radio
broadcast, motion pictures, wireless communications, gaming casinos, theme
parks, restaurants and lodging; and (iv) goods and services to companies in the
foregoing industries such as advertisers, textile companies and distribution and
shipping companies.
The Consumer Products and Services Portfolio expects that a significant portion
of its assets may be invested in the securities of U.S. issuers from time to
time, particularly those that market their products globally. However, consumer
products and services companies of a particular nation or region of the world
are often operated and owned in their local markets, close to their customers.
These companies, G.T. Capital believes, often offer superior opportunities for
capital growth as compared to their larger, multinational counterparts. Certain
global markets may be more attractive than others from time to time; companies
dependent on U.S. markets, for example, may be outperformed by companies not
dependent on U.S. markets.
G.T. Capital also believes that the demand for consumer products and services
worldwide will increase along with rising disposable incomes in both developed
and developing nations. Emerging economies, such as those in China, Southeast
Asia, the former Eastern Europe and Latin America, offer opportunities for the
growth and expansion of consumer markets. These regions currently comprise a
growing source of inexpensive manufacture of consumer products for export and a
growing source of demand for consumer products and services as the disposable
incomes of their populations increase. In G.T. Capital's view, these changes are
likely to create investment opportunities in companies, both local and
multi-national, that are able to employ innovative manufacturing, marketing,
retailing and distribution methods to open new markets and/or expand existing
markets.
HEALTH CARE FUND
The Health Care Fund's investment objective is long-term capital appreciation.
The Health Care Fund seeks its objective by investing primarily in equity
securities of health care companies throughout the world. The Health Care Fund
invests in health care companies, which, in the opinion of G.T. Capital, have
potential for above average, long-term growth in sales and earnings on a
sustained basis. There is no assurance that the Health Care Fund will achieve
its objective.
At least 65% of the Health Care Fund's total assets normally will be invested in
common and preferred stocks, and warrants to acquire such securities, issued by
health care companies. A "health care" company is an entity in which (i) at
least 50% of its revenues were derived from health care activities, or (ii) at
least 50% of its assets were devoted to such activities, based on the company's
most recent fiscal year. The remainder of the Health Care Fund's assets may be
invested in debt securities issued by health care companies and/or equity and
debt securities of companies outside of the health care industry, which, in the
opinion of G.T. Capital, stand to benefit from developments in the health care
industry. The Health Care Fund also may invest up to 35% of its total assets in
debt securities, including debt securities convertible into equity, when G.T.
Capital believes such debt securities present a favorable opportunity for
capital appreciation.
In analyzing companies for investment by the Health Care Fund, G.T. Capital
ordinarily looks for several of the following characteristics: above-average per
share earnings growth; high return on invested capital; a healthy balance sheet;
sound financial and accounting policies and overall financial strength; strong
competitive advantages; effective research and product development and
marketing; efficient service; pricing flexibility; strong management; and
general operating characteristics which will enable the companies to compete
successfully in their respective markets.
Prospectus Page 20
<PAGE>
G.T. GLOBAL THEME FUNDS
GLOBAL HEALTH CARE INDUSTRY INVESTMENT. The health care industry includes
companies that are substantially engaged in the design, manufacture or sale of
products or services used for or in connection with health care or medicine.
Such firms may include pharmaceutical companies; firms that design, manufacture,
sell or supply medical, dental and optical products, hardware or services;
companies involved in biotechnology, medical diagnostic, and biochemical
research and development; and companies involved in the ownership and/or
operation of health care facilities.
The Health Care Fund expects that, from time to time, a significant portion of
its assets may be invested in the securities of U.S. issuers. Health care,
however, is a global industry with significant, growing markets outside of the
United States. A sizeable portion of the companies which comprise the health
care industry are headquartered outside of the United States, and many important
pharmaceutical and biotechnology discoveries and technological breakthroughs
have occurred outside of the United States, primarily in Japan, the United
Kingdom and Western Europe.
G.T. Capital believes that various global health care industries offer
attractive long-term supply/ demand dynamics. While the U.S., western Europe,
and Japan presently account for over 90% of health care expenditures, this
should change dramatically in the coming decade if the populations of developing
countries devote an increasing percentage of income to health care.
Additionally, G.T. Capital believes demographics on aging point to a significant
increase in demand from the industrialized nations, as the elderly account for a
growing proportion of worldwide health care spending. Finally, in G.T. Capital's
view, technology will continue to expand the range of products and services
offered, with new drugs, medical devices and surgical procedures addressing
medical conditions previously considered untreatable.
In addition to these underlying trends, the United States is presently
experiencing a period of rapid and profound change in its own health care
system, marked by the rise of managed care, the formation of health care
delivery networks, and widespread consolidation across all segments of the
industry. G.T. Capital believes that this transition offers investment
opportunities in those companies acting as consolidators or otherwise gaining
market share at the expense of less efficient competitors.
TELECOMMUNICATIONS FUND
The Telecommunications Fund's investment objective is long-term growth of
capital. The Telecommunications Fund seeks its objective by investing primarily
in equity securities of companies throughout the world engaged in the
development, manufacture or sale of telecommunications services or equipment.
The Telecommunications Fund invests in telecommunications companies which, in
the opinion of G.T. Capital, have potential for above average, long-term growth
in sales and earnings on a sustained basis. There is no assurance that the
Telecommunications Fund will achieve its objective.
At least 65% of the Telecommunications Fund's total assets normally will be
invested in common and preferred stocks and warrants to acquire such securities
issued by telecommunications companies. A "telecommunications" company is an
entity in which (i) at least 50% of either its revenues or earnings was derived
from telecommunications activities, or (ii) at least 50% of its assets was
devoted to telecommunications activities, based on the company's most recent
fiscal year. The remainder of the assets of the Telecommunications Fund may be
invested in debt securities issued by telecommunications companies, and/or
equity and debt securities of companies outside of the telecommunications
industry which, in the opinion of G.T. Capital, stand to benefit from
developments in the telecommunications industry.
In analyzing companies for investment by the Telecommunications Fund, G.T.
Capital ordinarily looks for several of the following characteristics:
above-average per share earnings growth; high return on invested capital; a
healthy balance sheet; sound financial and accounting policies and overall
financial strength; strong competitive advantages; effective research and
product development and marketing; development of new technologies; efficient
service; pricing flexibility; strong management; and general operating
characteristics that will enable the companies to compete successfully in their
respective markets.
GLOBAL TELECOMMUNICATIONS INDUSTRY INVESTMENT. The telecommunications industry
is comprised of a variety of sectors, ranging from companies concentrating on
established technologies to those primarily engaged in emerging or developing
technologies. The characteristics of companies focusing on the same technology
will vary among countries depending upon the extent to which the technology is
established in the particular
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G.T. GLOBAL THEME FUNDS
country. G.T. Capital will allocate the Telecommunications Fund's investments
among these sectors depending upon its assessment of their relative long-term
growth potentials.
For purposes of the Telecommunications Fund's policy of investing at least 65%
of its total assets in the securities of telecommunications companies, the
companies in which the Telecommunications Fund will invest are those engaged
primarily in designing, developing or providing the following products and
services: communications equipment and services (including equipment and
services for both data and voice transmission); electronic components and
equipment; broadcasting (including television and radio, satellite, microwave
and cable television and narrow-casting); computer equipment, mobile
communications and cellular radio/paging; electronic mail; local and wide area
networking and linkage of word and data processing systems; publishing and
information systems; videotext and teletext; and emerging technologies combining
telephone, television and/or computer systems.
G.T. Capital believes that there are opportunities for continued growth in
demand for components, products, media and systems to collect, store, retrieve,
transmit, process, distribute, record, reproduce and use information. The
pervasive societal impact of communications and information has been accelerated
by the lower costs and higher efficiencies that result from the blending of
computers with telecommunications systems. Accordingly, companies engaged in the
production of methods for using electronic and, potentially, video technology to
communicate information are expected to be important in the Telecommunications
Fund's portfolio. Older technologies, such as photography and print also may be
represented, however.
GLOBAL INVESTMENTS. Each Theme Portfolio expects that, from time to time, a
significant portion of its assets may be invested in the securities of domestic
issuers. Each industry represented in the Theme Portfolios, however, is a global
industry with significant, growing markets outside of the United States. A
sizeable proportion of the companies which comprise such industries are
headquartered outside of the United States.
For these reasons, G.T. Capital believes that a portfolio comprised only of
securities of U.S. issuers does not provide the greatest potential for return
from a Theme Portfolio investment. G.T. Capital uses its financial expertise in
markets located throughout the world and the substantial global resources of the
G.T. Group in attempting to identify those countries and companies then
providing the greatest potential for long-term capital appreciation. In this
fashion, G.T. Capital seeks to enable shareholders to capitalize on the
substantial investment opportunities and the potential for long-term growth of
capital presented by the global industries represented in the Theme Portfolios.
G.T. Capital allocates each Theme Portfolio's assets among securities of
countries and in currency denominations where opportunities for meeting each
Theme Portfolio's investment objective are expected to be the most attractive.
Each Theme Portfolio may invest substantially in securities denominated in one
or more currencies. Under normal conditions, each Theme Portfolio except the
Health Care Fund invests in the securities of issuers located in at least three
countries, including the United States; investments in securities of issuers in
any one country, other than the United States, will represent no more than 40%
of the Financial Services Portfolio's and the Telecommunication Fund's total
assets, and no more than 50% of the Infrastructure Portfolio's, the Natural
Resources Portfolio's and the Consumer Products and Services Portfolio's total
assets. The Health Care Fund is not limited with regard to the percentage of
assets that may be invested in the securities of issuers located in a particular
country.
PRIVATIZATIONS. The governments of some foreign countries have been engaged in
programs of selling part or all of their stakes in government owned or
controlled enterprises ("privatizations"). G.T. Capital believes that
privatizations may offer opportunities for significant capital appreciation and
intends to invest assets of the Theme Portfolios in privatizations in
appropriate circumstances. In certain foreign countries, the ability of foreign
entities such as the Theme Portfolios to participate in privatizations may be
limited by local law, or the terms on which the Theme Portfolios may be
permitted to participate may be less advantageous than those for local
investors. There can be no assurance that foreign governments will continue to
sell companies currently owned or controlled by them or that privatization
programs will be successful.
OTHER POLICIES. The Financial Services Portfolio, Infrastructure Portfolio,
Natural Resources Portfolio, Consumer Products and Services Portfolio and
Telecommunications Fund each may invest up to 15% of its net assets, and the
Health Care Fund up to 10% of its total assets, in securities for which
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G.T. GLOBAL THEME FUNDS
no readily available market exists, so-called "Illiquid Securities." G.T.
Capital believes that carefully selected investments in joint ventures,
cooperatives, partnerships and state enterprises which are illiquid
(collectively, "Special Situations") could enable the Portfolio to achieve
capital appreciation substantially exceeding the appreciation the Portfolio
would realize if it did not make such investments. However, in order to attempt
to limit investment risk, each of the Theme Portfolios will invest no more than
5% of its total assets in Special Situations.
The Financial Services Portfolio, Health Care Fund and Telecommunications Fund
each currently will not invest more than 5%, and the Infrastructure Portfolio,
the Natural Resources Portfolio and the Consumer Products and Services Portfolio
not more than 20%, of its total assets in debt securities rated below investment
grade, that is, rated below one of the four highest rating categories by
Standard & Poor's Ratings Group ("S&P") or Moody's Investors Service, Inc.
("Moody's") or deemed to be of equivalent quality in the judgment of G.T.
Capital. See "Risk Factors -- Risks Associated with Debt Securities." Securities
rated in the lowest category of investment grade, that is, securities rated BBB
by S&P or Baa by Moody's, are considered by S&P and Moody's to have speculative
characteristics. Debt securities rated below investment grade are the equivalent
of high yield, high risk bonds, commonly known as "junk bonds." Such securities
may include (i) corporate debt securities and (ii) debt instruments issued by
governments whose debt is unrated and are subject to a greater risk of loss of
principal and interest than those of securities rated above BBB by S&P or Baa by
Moody's in the four highest rating categories described above. The Theme
Portfolios may also use instruments (including forward contracts) often referred
to as "derivatives." See "Options, Futures and Forward Currency Transactions."
TEMPORARY DEFENSIVE STRATEGIES. Each Theme Portfolio retains the flexibility to
respond promptly to changes in market and economic conditions. Accordingly, in
the interest of preserving shareholders' capital and consistent with each Theme
Portfolio's investment objective, G.T. Capital may employ a temporary defensive
investment strategy if it determines such a strategy to be warranted due to
market, economic or political conditions. Under a defensive strategy, each Theme
Portfolio may hold cash (U.S. dollars, foreign currencies or multinational
currency units) and/or invest any portion or all of its assets in debt
securities or high quality money market instruments issued by corporations, or
the U.S. or a foreign government. For temporary defensive purposes, such as
during times of international political or economic uncertainty, most or all of
each Theme Portfolio's investments may be made in the United States and
denominated in U.S. dollars. To the extent any Theme Portfolio 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 the Funds' shares
or to meet its ordinary daily cash needs, each Theme Portfolio may hold cash
(U.S. dollars, foreign currencies or multinational currency units) and may
invest in foreign or domestic high quality money market instruments. Money
market instruments in which each Theme Portfolio may invest include, but are not
limited to, U.S. or foreign government securities; high-grade commercial paper;
bank certificates of deposit; bankers' acceptances; and repurchase agreements
related to any of the foregoing. High-grade commercial paper refers to
commercial paper rated A-1 by S&P or P-1 by Moody's or, if unrated, determined
by G.T. Capital to be of comparable quality.
INVESTMENTS IN OTHER INVESTMENT COMPANIES. Each Theme Portfolio may invest up to
10% of its total assets in other investment companies. As a shareholder in an
investment company, that Theme Portfolio would bear its ratable share of that
investment company's expenses, including its advisory and administration fees.
At the same time, the Theme Portfolio would continue to pay its own management
fees and other expenses.
BORROWING. From time to time, it may be advantageous for a Theme Portfolio to
borrow money rather than sell existing portfolio positions to meet redemption
requests. Accordingly, a Theme Portfolio may borrow from banks or may borrow
through reverse repurchase agreements and "roll" transactions in connection with
meeting requests for the redemptions of a Theme Portfolio's shares.
A reverse repurchase agreement is a borrowing transaction in which a Theme
Portfolio transfers possession of a security to another party, such as a bank or
broker/dealer, in return for cash, and agrees to repurchase the security in the
future at an agreed upon price which includes an interest component. A "roll"
borrowing transaction involves a Theme Portfolio's sale of securities together
with its commitment (for which that Theme Portfolio
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G.T. GLOBAL THEME FUNDS
may receive a fee) to purchase similar, but not identical, securities at a
future date.
Any Theme Portfolio's borrowings will not exceed 33 1/3% of that Theme
Portfolio's total assets, i.e., that Theme Portfolio's total assets at all times
will equal at least 300% of the amount of outstanding borrowings. If market
fluctuations in the value of the Theme Portfolio's securities holdings or other
factors cause the ratio of the Theme Portfolio's total assets to outstanding
borrowings to fall below 300%, within three days (excluding Sundays and
holidays) of such event the Theme Portfolio may be required to sell portfolio
securities to restore the 300% asset coverage, even though from an investment
standpoint such sales might be disadvantageous. A Theme Portfolio also may
borrow up to 5% of its total assets for temporary or emergency purposes other
than to meet redemptions. Any borrowing by a Theme Portfolio may cause greater
fluctuation in the value of its shares than would be the case if a Theme
Portfolio did not borrow. If a Theme Portfolio's borrowings exceed 5% of its
total assets, no additional investments will be made.
SECURITIES LENDING. Each Theme Portfolio is authorized to make loans of its
portfolio securities to broker/dealers or to other institutional investors. The
borrower must maintain with the Theme Portfolio's custodian collateral
consisting of cash, U.S. government securities or other liquid, high-grade debt
securities equal to at least the value of the borrowed securities, plus any
accrued interest. The Theme Portfolios will receive any interest paid on the
loaned securities and a fee and/or a portion of the interest earned on the
collateral. Each Theme Portfolio 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 securities or possible loss of rights in the
collateral should the borrower fail financially.
WHEN-ISSUED OR FORWARD COMMITMENT SECURITIES. The Theme Portfolios may purchase
debt securities on a "when-issued" basis and may purchase or sell such
securities on a "forward commitment" basis in order to hedge against anticipated
changes in interest rates and prices. The price, which 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 a Theme
Portfolio 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 Theme
Portfolio. If the Theme Portfolio disposes of the right to acquire a when-issued
security prior to its acquisition or disposes of its right to deliver or receive
against a forward commitment, it may incur a gain or loss. At the time a Theme
Portfolio 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 its custodian and will be
marked to market daily. There is a risk that the securities may not be delivered
and that the Theme Portfolio may incur a loss.
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G.T. GLOBAL THEME FUNDS
RISK FACTORS
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FINANCIAL SERVICES FUND AND FINANCIAL SERVICES PORTFOLIO
The Financial Services Portfolio concentrates its assets in the global financial
services industry, and thus should not be considered as a complete investment
program. Because the Financial Services Portfolio focuses on this specific
investment area, the price of Financial Services Fund shares may be more
volatile than that of investment companies that do not concentrate their
investments in such a manner. The value of Financial Services Fund shares may be
susceptible to factors affecting the financial services industry.
The financial services industry may be subject to greater governmental
regulation than many other industries and changes in governmental policies and
the need for regulatory approvals may have a material effect on the services of
this industry. Banks, savings institutions and loan associations, and finance
companies are subject to extensive governmental regulation which may limit both
the financial commitments they can make, including the amounts and types of
loans, and the interest rates and fees they can charge. These companies are
subject to rapid business changes, significant competition, value fluctuations
due to the concentration of loans in particular industries significantly
affected by economic conditions (such as real estate or energy) and volatile
performance dependent upon the availability and cost of capital and prevailing
interest rates. In addition, general economic conditions significantly affect
these companies. Credit and other losses resulting from the financial difficulty
of borrowers or other third parties potentially have an adverse effect on
companies in this industry. Moreover, neither federal insurance of deposits nor
governmental regulation ensures the solvency or profitability of commercial
banks or thrifts or their holding companies, or insures against any risk of
investment in the securities issued by such institutions.
Similar considerations affect the financial services sector in foreign
countries. In particular, government regulation in certain foreign countries may
include interest rate controls, credit controls and price controls. Moreover, in
some cases foreign governments have taken steps to nationalize the operations of
certain companies, such as banks, in the financial services sector.
The laws generally separating commercial and investment banking, as well as laws
governing the capitalization and regulation of the industry, currently are being
studied by U.S. governmental authorities. The services offered by banks may
expand if legislation broadening bank powers is enacted. While providing
diversification, expanded powers could expose banks to well-established
competitors, particularly as the historical distinctions between banks and other
financial institutions erode. Increased competition may result from the
broadening of regional and national interstate powers, which has led to a
decline in the number of publicly traded regional banks, and from the aggressive
expansion of larger, publicly held foreign banks. Foreign banks, particularly
those of Japan, recently have reported financial difficulties attributed to
increased competition, regulatory changes, and general economic difficulties.
In addition, recent legislation has altered significantly the regulatory
environment for savings institutions. This legislation was enacted in response
to financial problems experienced by a number of thrifts due to inadequate
capitalization resulting from diversification into commercial lending and other
areas and alleged fraud and mismanagement, as well as in response to
deterioration in the financial condition of the Federal Savings and Loan
Insurance Corporation, the federal agency that had insured deposits for most
thrifts. The Federal Deposit Insurance Corporation ("FDIC") now insures deposits
in both banks and thrifts. The legislation has given federal regulators
substantial authority to use all of the assets of a bank or thrift holding
company to satisfy federal claims against an insolvent thrift or bank owned by
the holding company. These changes have expanded the risk to holding company
shareholders in the event of the insolvency of any depository institution owned
by the holding company. Additionally, changes in the extent to which the FDIC
will insure deposits may result in a higher cost of funds for banks and thrifts
and the loss of deposits to competitors that are viewed as better capitalized.
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G.T. GLOBAL THEME FUNDS
The financial services area currently is changing relatively rapidly as existing
distinctions between various financial service segments become less clear. For
instance, recent business combinations have included insurance, finance, and
securities brokerage under single ownership. Some primarily retail corporations
have expanded into securities and insurance fields. In addition, investment
banking, securities brokerage and investment advisory companies in particular
are subject to government regulation and risk due to securities trading and
underwriting activities.
Many of the investment considerations discussed in connection with banks,
savings institutions and loan associations, and finance companies also apply to
insurance companies. The performance of insurance investments will be subject to
risk from several factors. The earnings of insurance companies will be affected
by interest rates, pricing (including severe pricing competition, from time to
time), claims activity, marketing competition and general economic conditions.
Particular insurance lines also will be influenced by specific matters. Property
and casualty insurer profits may be affected by certain weather catastrophes and
other disasters. Life and health insurer profits may be affected by mortality
and morbidity rates. Individual companies may be exposed to material risks,
including reserve inadequacy, problems in investment portfolios (due to real
estate or "junk" bond holdings, for example), and the inability to collect from
reinsurance carriers. Insurance companies are subject to extensive governmental
regulation, including the imposition of maximum rate levels, which may not be
adequate for some lines of business. Proposed or potential anti-trust or tax law
changes also may affect adversely insurance companies' policy sales, tax
obligations and profitability. In addition, significant insurance companies
recently have reported liquidity or solvency difficulties, or have experienced
credit rating downgrades.
INFRASTRUCTURE FUND AND INFRASTRUCTURE PORTFOLIO
The Infrastructure Portfolio primarily invests its assets in the global
infrastructure industries, and thus should not be considered as a complete
investment program. Because the Infrastructure Portfolio focuses on this
specific investment area, the price of Infrastructure Fund shares may be more
volatile than that of investment companies that do not concentrate their
investments in such a manner. The value of Infrastructure Fund shares may be
susceptible to factors affecting the infrastructure industries. In both the U.S.
and foreign countries, these industries may be subject to greater political,
environmental and other governmental regulation than many other industries.
The nature of such regulation continues to evolve in both the United States and
foreign countries, and changes in governmental policies and the need for
regulatory approvals may have a material effect on the products and services of
this industry. Electric, gas, water and most telecommunications companies in the
United States, for example, are subject to both federal and state regulation
affecting permitted rates of return and the kinds of services that may be
offered. Changes in prevailing interest rates may also affect the Infrastructure
Fund's share values because prices of equity and debt securities of
infrastructure companies often tend to increase when interest rates decline and
decrease when interest rates rise.
In addition, many infrastructure companies, including coal, steel, and other
types of companies, have historically been subject to the risks attendant to
increases in fuel and other operating costs, high interest costs on borrowed
funds, costs associated with compliance with environmental and other safety
regulations and changes in the regulatory climate. Such governmental regulation
may also hamper the development of new technologies, and it is impossible to
predict the direction, type or effect of any future regulation. Further
competition is intense for many infrastructure companies. As a result, many of
these companies may be adversely affected in the future and such companies may
be subject to increased share price volatility. In addition, many companies have
diversified into oil and gas exploration and development, therefore returns may
be more sensitive to energy prices. Other infrastructure companies, such as
water supply companies, are in a highly fragmented industry due to local
ownership. Generally these companies are mature and are experiencing little or
no growth.
NATURAL RESOURCES FUND AND NATURAL RESOURCES PORTFOLIO
The Natural Resources Portfolio primarily invests its assets in the global
natural resource industries, and thus should not be considered as a complete
investment program. Because the Natural Resources Portfolio focuses on this
specific investment area, the price of Natural Resources Fund shares may be more
volatile than that of investment companies that do not concentrate their
investments in such a manner. The value of Natural Resources Fund shares may be
susceptible to factors affecting the natural resource industries. In both
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G.T. GLOBAL THEME FUNDS
the U.S. and foreign countries, for example, these industries may be subject to
greater political, environmental and other governmental regulation than other
industries.
The nature of such regulation continues to evolve in both the U.S. and foreign
countries, and changes in governmental policies and the need for regulatory
approvals may have a material effect on the products and services of natural
resource companies. For example, the exploration, development and distribution
of coal, oil and gas in the United States are subject to significant federal and
state regulation, which may affect rates of return on such investments and the
kinds of services that may be offered.
In addition, many natural resource companies historically have been subject to
significant costs associated with compliance with environmental and other safety
regulations and changes in the regulatory climate. Such governmental regulations
may also hamper the development of new technologies, and it is impossible to
predict the direction, type or effect of any future regulation.
Further, competition is intense for many natural resource companies. As a
result, many of these companies may be adversely affected in the future and the
value of the securities issued by such companies may be subject to increased
share price volatility.
The value of the Natural Resources Portfolio's securities will fluctuate in
response to stock market developments, as well as market conditions for the
particular natural resources with which the issuer is involved. The price of the
commodity will fluctuate due to changes in worldwide levels of inventory, and
changes, perceived or actual, in production and consumption. The values of
natural resources may fluctuate directly with respect to various stages of the
inflationary cycle and perceived inflationary trends and are subject to numerous
factors, including national and international politics. The Natural Resources
Portfolio's investments in precious metals are subject to many risks, including
substantial price fluctuations over short periods of time. Further, the Natural
Resources Portfolio's investments in companies are expected to be subject to
irregular fluctuations in earnings, because these companies are affected by
changes in the availability of money, the level of interest rates, and other
factors.
CONSUMER PRODUCTS AND SERVICES FUND AND CONSUMER PRODUCTS AND SERVICES PORTFOLIO
The Consumer Products and Services Portfolio primarily invests its assets in the
global consumer products and services industries, and thus should not be
considered as a complete investment program. Because the Consumer Products and
Services Portfolio focuses on this specific investment area, the price of
Consumer Products and Services Fund shares may be more volatile than that of
investment companies that do not concentrate their investments in such a manner.
The value of Consumer Products and Services Fund shares will be susceptible to
factors affecting the consumer products and services industries.
General economic conditions significantly affect these companies. The
performance of consumer products manufacturers, marketers, retailers and
distributors relates closely to the performance of the overall economy, interest
rates and consumer confidence. Such performance also depends substantially on
disposable household income and consumer spending, both of which are closely
tied to the actual or perceived performance of the overall economy. In addition,
changes in demographics and consumer tastes may also affect the demand for, and
success of, consumer products and services in the global marketplace. Further,
competition is keen for many consumer products and services companies.
As a result, many consumer products and services companies may be adversely
affected and the value of the securities issued by such companies may be subject
to increased share price volatility. In addition, many consumer products and
services companies have unpredictable earnings, due in part to changes in
consumer tastes and intense competition. Also, the consumer products and
services industries have reacted strongly to technology development and to the
threat of government regulation. These industries may be subject to greater
government regulation, including trade regulation, than many other industries.
Changes in governmental policy and the need for regulatory approvals may have a
material effect on the products and services of the consumer products and
services industries. Such governmental regulations may also hamper the
development of new business opportunities, and it is impossible to predict the
direction, type or effect of any future government regulation.
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G.T. GLOBAL THEME FUNDS
HEALTH CARE FUND
The Health Care Fund primarily invests its assets in the global health care
industry and, as a result, should not be considered as a complete investment
program. Because the Health Care Fund focuses on this specific investment area,
the price of Health Care Fund shares may be more volatile than that of
investment companies that do not concentrate their investments in such a manner.
The value of Health Care Fund shares may be susceptible to factors affecting the
health care industry. The health care industry generally is subject to
substantial government regulation; accordingly, changes in government policies
or regulation could have a material effect on the demand for products and
services offered by health care companies and therefore could affect the
performance of the Health Care Fund. In addition, the products and services
offered by such companies may be subject to rapid obsolescence caused by
technological and scientific advances. Moreover, although the Health Care Fund's
portfolio will consist of securities of a substantial number of issuers, the
Health Care Fund's status as a "non-diversified" investment company pursuant to
the 1940 Act means that, with respect to 50% of the Health Care Fund's total
assets, more than 5% may be invested in the securities of a single issuer.
Because the Health Care Fund concentrates in health care companies and is
non-diversified, the value of the Health Care Fund's shares may fluctuate more
widely, and the Health Care Fund may present greater risk than funds investing
in a greater number of industries or issuers.
TELECOMMUNICATIONS FUND
The Telecommunications Fund primarily invests its assets in the global
telecommunications industry and, as a result, should not be considered as a
complete investment program. Because the Telecommunications Fund focuses on this
specific investment area, the price of Telecommunications Fund shares may be
more volatile than that of investment companies that do not concentrate their
investments in such a manner. The value of Telecommunications Fund shares may be
susceptible to factors affecting the telecommunications industry. This industry
may be subject to greater governmental regulation than many other industries and
changes in governmental policies and the need for regulatory approvals may have
a material effect on the products and services of this industry. Telephone
operating companies in the United States, for example, are subject to both
federal and state regulation affecting permitted rates of return and the kinds
of services that may be offered. Certain types of companies represented in the
Fund are engaged in fierce competition for a share of the market for their
products. In recent years, these have been companies providing goods and
services such as private and local area networks and telephone set equipment.
Moreover, the investment flexibility of the Telecommunications Fund may be
restricted by the necessity of satisfying certain diversification requirements
in order to maintain the qualification of the Telecommunications Fund as a
regulated investment company within the meaning of the Internal Revenue Code of
1986, as amended ("Code").
RISKS ASSOCIATED WITH DEBT SECURITIES. The value of the debt securities held by
each Theme Portfolio generally will vary conversely with market interest rates.
If interest rates in a market fall, the value of the debt securities held by
each Theme Portfolio ordinarily will rise. If market interest rates increase,
however, the debt securities owned by each Theme Portfolio in that market will
be likely to decrease in value.
As discussed above, the Infrastructure Portfolio, Natural Resources Portfolio
and Consumer Products and Services Portfolio may each invest up to 20% of its
total assets in debt securities rated below investment grade. Such investments
involve a high degree of risk. However, the Infrastructure Portfolio, Natural
Resources Portfolio and Consumer Products and Services Portfolio will not invest
in debt securities that are in default as to payment of principal and interest.
Debt rated BB, B, CCC, CC and C by S&P and debt rated Ba, B, Caa, Ca, C by
Moody's is regarded, 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
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G.T. GLOBAL THEME FUNDS
deterioration of general economic conditions. These 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. See
"Description of Debt Ratings" in the Statement of Additional Information for a
full discussion of Moody's and S&P's ratings.
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. 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 of corporate issuers frequently have call or
buy-back features which would permit an issuer to call or repurchase the
security from the Theme Portfolios. If an issuer exercises these provisions in a
declining interest rate market, the Theme Portfolios may have to replace the
security with a lower yielding security, resulting in a decreased return for
investors. In addition, the Theme Portfolios 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 each
of the Theme Portfolios 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 Theme Portfolios to obtain
accurate market quotations for purposes of valuing the Theme Portfolios
portfolio investments. The Theme Portfolios 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 Theme Portfolios may
invest include: (i) potential adverse publicity; (ii) heightened sensitivity to
general economic or political conditions; and (iii) the likely adverse impact of
a major economic recession. The Theme Portfolios may also incur additional
expenses to the extent it is required to seek recovery upon a default in the
payment of principal or interest on its portfolio holdings, and the Theme
Portfolios may have limited legal recourse in the event of a default.
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 each of the Theme Portfolios and consider their ability to
assume the investment risks involved before making an investment.
OTHER RISK FACTORS. While each Theme Portfolio's portfolio normally will include
securities of established suppliers of traditional products and services, each
Theme Portfolio may invest in smaller companies which can benefit from the
development of new products and services. These smaller companies may present
greater opportunities for capital appreciation, but may also involve greater
risks than large, established issuers. Such smaller companies may have limited
product lines, markets or financial resources, and their securities may trade
less frequently and in more limited volume than the securities of larger, more
established companies. As a result, the prices of the
Prospectus Page 29
<PAGE>
G.T. GLOBAL THEME FUNDS
securities of such smaller companies may fluctuate to a greater degree than the
prices of the securities of other issuers.
G.T. Capital believes that a global portfolio of investments in the industries
represented by the Theme Portfolios may be less subject to market risk (the risk
attendant to investing in a particular market) and price fluctuation than a
portfolio invested solely in the securities of domestic issuers. Under each of
the Theme Portfolios' policies, G.T. Capital may shift the country allocations
of the Theme Portfolios' investments as market conditions in individual
countries change. Moreover, the number of different investment opportunities
from which the Theme Portfolios may choose is significantly broader than that of
a fund investing solely in the securities of U.S. companies.
Foreign investing entails certain risks. The securities of non-U.S. issuers
generally will not be registered with, nor the issuers thereof be subject to,
the reporting requirements of the SEC. Accordingly, there may be less publicly
available information about foreign securities and issuers than is available
about domestic securities and issuers. Foreign companies generally are not
subject to uniform accounting, auditing and financial reporting standards,
practices and requirements comparable to those applicable to domestic companies.
In addition, certain costs attributable to foreign investing, such as custody
charges, are higher than those attributable to domestic investing. Securities of
some foreign companies are less liquid and their prices may be more volatile
than securities of comparable domestic companies. The Theme Portfolios' interest
and dividends from foreign issuers may be subject to non-U.S. withholding taxes,
thereby reducing the Theme Portfolios' net investment income.
With respect to some foreign countries, there is the increased possibility of
expropriation or confiscatory taxation, limitations on the removal of funds or
other assets of the Theme Portfolios' political or social instability, or
diplomatic developments which could affect the Theme Portfolios' investments in
those countries. Moreover, individual foreign economies may differ favorably or
unfavorably from the U.S. economy in such respects as growth of gross national
product, rate of inflation, rate of savings and capital reinvestment, resource
self-sufficiency and balance of payments positions.
Since the Theme Portfolios may invest substantially in securities denominated in
currencies other than the U.S. dollar, and since the Theme Portfolios may hold
foreign currencies, the Theme Portfolios 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 the Funds' shares, and also may affect the value of
dividends and interest earned by the Theme Portfolios and gains and losses
realized by the Theme Portfolios. 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.
OPTIONS, FUTURES AND FORWARD CURRENCY TRANSACTIONS. Each Theme Portfolio may use
forward currency contracts, futures contracts, options on securities, options on
indices, options on currencies and options on futures contracts to implement
strategies to attempt to hedge its portfolio, I.E., reduce the overall level of
investment risk normally associated with the portfolio. These instruments are
often referred to as "derivatives," which may be defined as financial
instruments whose performance is derived, at least in part, from the performance
of another asset (such as a security, currency or an index of securities). Each
Theme Portfolio may enter into such instruments up to the full value of its
portfolio assets. There can be no assurance that these hedging efforts will
succeed. These techniques are described below and are further detailed in the
Statement of Additional Information.
To attempt to hedge against adverse movements in exchange rates between
currencies, each Theme Portfolio 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 Theme Portfolios may
enter into forward currency contracts either with respect to specific
transactions or with respect to that Theme Portfolio's portfolio positions. For
example, when a Theme Portfolio anticipates making a purchase or sale of a
security, that Theme Portfolio 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, a Theme Portfolio may
Prospectus Page 30
<PAGE>
G.T. GLOBAL THEME FUNDS
enter into a forward contract to sell the currency G.T. Capital expects to
decline in an amount approximating the value of some or all of that Theme
Portfolio's portfolio securities denominated in a foreign currency. Each Theme
Portfolio also may purchase and sell put and call options on currencies, futures
contracts on currencies and options on futures contracts on currencies to hedge
against movements in exchange rates.
In addition, a Theme Portfolio may purchase and sell put and call options on
equity and debt securities to hedge against the risk of fluctuations in the
prices of securities held by that Theme Portfolio or that G.T. Capital intends
to include in the Theme Portfolio's portfolio. The Theme Portfolio also may
purchase and sell put and call options on stock indexes. Such stock index
options serve to hedge against overall fluctuations in the securities markets
generally or in the natural resources market sector specifically, rather than
anticipated increases or decreases in the value of a particular security.
Further, a Theme Portfolio may sell stock index futures contracts and may
purchase put options or write call options on such futures contracts to protect
against a general stock market decline or a decline in the financial services
market sector that could affect adversely a Theme Portfolio's holdings. A Theme
Portfolio also may buy stock index futures contracts and purchase call options
or write put options on such contracts to hedge against a general stock market
or market sector advance and thereby attempt to lessen the cost of future
securities acquisitions. A Theme Portfolio may use interest rate futures
contracts and options thereon to hedge the debt portion of its portfolio against
changes in the general level of interest rates.
In addition, each Theme Portfolio may purchase and sell put and call options on
securities, currencies and indices that are traded on recognized securities
exchanges and over-the-counter markets.
These practices may result in the loss of principal under certain conditions. In
addition, certain provisions of the Code limit the extent to which a Theme
Portfolio may enter into forward contracts or futures contracts, or engage in
options transactions. See "Taxes" in the Statement of Additional Information.
Although a Theme Portfolio might not employ any of the foregoing strategies, its
use of forward currency contracts, options and futures 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 or in the appropriate market sector and movements in
interest rates and currency markets; (2) imperfect correlation, or even no
correlation, between movements in the price of options, forward contracts,
futures contracts or options thereon and movements in the price of the currency
or security hedged or used for cover; (3) the fact that skills and techniques
needed to trade options, futures contracts and options thereon or to use forward
currency contracts are different from those needed to select the securities in
which a Theme Portfolio invests; (4) lack of assurance that a liquid secondary
market will exist for any particular option, futures contract or option thereon
at any particular time; (5) the possible inability of a Theme Portfolio to
purchase or sell a portfolio security at a time when it would otherwise be
favorable for it to do so, or the possible need for a Theme Portfolio to sell a
security at a disadvantageous time, due to the need for the Theme Portfolio to
maintain "cover" or to segregate securities in connection with hedging
transactions; and (6) the possible need 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
market movements, currency exchange rates or interest rates in utilizing a
strategy for a Theme Portfolio, the Theme Portfolio would be in a better
position if it had not hedged at all. A Theme Portfolio may 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.
REPURCHASE AGREEMENTS. Repurchase agreements are transactions in which a Theme
Portfolio purchases a security from a bank or recognized securities dealer and
simultaneously commits to resell that security to the bank or dealer at an
agreed-upon price, date, and market rate of interest unrelated to the coupon
rate or maturity of the purchased security. Although repurchase agreements carry
certain risks not associated with direct investments in securities, including
possible decline in the market value of the underlying securities and delays and
costs to the Theme Portfolio if the other party to the repurchase agreement
Prospectus Page 31
<PAGE>
G.T. GLOBAL THEME FUNDS
becomes bankrupt, the Theme Portfolios intend to enter into repurchase
agreements only with banks and dealers believed by G.T. Capital to present
minimal credit risks in accordance with guidelines established by the Company's
Board of Directors, or a Portfolio's Board of Trustees, as applicable. G.T.
Capital will review and monitor the creditworthiness of such institutions under
the Board's general supervision. See "Investment Objective and Policies --
Repurchase Agreements" in the Statement of Additional Information.
OTHER INFORMATION. The investment objective of each Fund may not be changed
without the approval of a majority of that 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 Fund's
shares represented at a meeting at which more than 50% of the outstanding shares
are represented, or (ii) more than 50% of the outstanding shares. In addition,
each Fund has adopted certain investment limitations as fundamental policies
which also may not be changed without shareholder approval. Unless specifically
noted, the Portfolios' and the Funds' investment policies described in this
Prospectus, and in the Statement of Additional Information, including the
policies with respect to investment in its particular sector's securities and
the percentage limitations with respect to such investments, are not fundamental
policies and may be changed by vote of the Company's Board of Directors or the
Portfolio's Board of Trustees, as applicable, without shareholder approval. Each
Fund's policies regarding concentration and lending, and the percentage of that
Fund's assets that may be committed to borrowing, are fundamental policies and
may not be changed without shareholder approval. See "Investment Limitations" in
the Statement of Additional Information.
OTHER INFORMATION REGARDING THE PORTFOLIOS. The Financial Services Fund,
Infrastructure Fund, Natural Resources Fund and Consumer Products and Services
Fund may each withdraw its investment in its corresponding Portfolio at any
time, if the Board of Directors of the Company determines that it is in the best
interests of that Fund and its shareholders to do so. Upon such withdrawal, the
Board would consider what action might be taken, including the investment of all
the investable assets of that Fund in another pooled investment entity having
substantially the same investment objective as that Fund or the retention by
that Fund of its own investment adviser to manage that Fund's assets in
accordance with the investment objective, policies and limitations discussed
herein with respect to each such Fund and its investment in its corresponding
Portfolio.
The approval of the Financial Services Fund, Infrastructure Fund, Natural
Resources Fund and Consumer Products and Services Fund and of other investors in
their corresponding Portfolio, if any, is not required to change the investment
objective, policies or limitations of that Portfolio, unless otherwise
specified. Written notice shall be provided to shareholders of such Fund thirty
days prior to any changes in its corresponding Portfolio's investment objective.
If the objective of that Portfolio changes and the shareholders of the
corresponding Fund do not approve a parallel change in such Fund's investment
objective, that Fund would seek an alternative investment vehicle or directly
retain its own investment adviser.
As previously described, investors should be aware that the Financial Services
Fund, Infrastructure Fund, Natural Resources Fund and Consumer Products and
Services Fund, unlike mutual funds which directly acquire and manage their own
portfolios of securities, seek to achieve their investment objective by
investing all of their investable assets in the Financial Services Portfolio,
Infrastructure Portfolio, Natural Resources Portfolio and Consumer Products and
Services Portfolio, respectively, each of which is a separate investment
company, as previously described. Since its corresponding Fund will invest only
in its corresponding Portfolio, that Fund's shareholders will acquire only an
indirect interest in the investments of that Portfolio. Historically, G.T.
Capital and G.T. Global have sponsored traditionally structured funds, and,
therefore, have limited experience with funds that invest all their assets in a
separate portfolio.
In addition to selling its interest to its corresponding Fund, the Financial
Services Portfolio, Infrastructure Portfolio, Natural Resources Portfolio and
Consumer Products and Services Portfolio may each sell its interests to other
non-affiliated investment companies and/or other institutional investors. All
institutional investors in a Portfolio will pay a proportionate share of that
Portfolio's expenses and will invest in that Portfolio on the same terms and
conditions. However, if another investment company invests all of its assets in
a Portfolio, it would not be required to sell its shares at the same public
offering price as the Portfolio's corresponding Fund and may change different
sales commissions. Therefore, investors in the Financial
Prospectus Page 32
<PAGE>
G.T. GLOBAL THEME FUNDS
Services Fund, Infrastructure Fund, Natural Resources Fund and Consumer Products
and Services Fund may experience different returns from investors in another
investment company which invests exclusively in its corresponding Portfolio. As
of the date of this Prospectus, the Financial Services Fund, Infrastructure
Fund, Natural Resources Fund and Consumer Products and Services Fund are the
only institutional investors in their corresponding Portfolios. However, the
Financial Services Portfolio, Infrastructure Portfolio, Natural Resources
Portfolio and Consumer Products and Services Portfolio expect to offer
beneficial interests to other institutional investors in the future. Although
interests in the Portfolios are not currently available, either directly or
indirectly, to individual investors through other funds, information regarding
any such funds will be available from G.T. Global at the appropriate toll-free
telephone number provided in the Shareholder Account Manual.
Investors in the Financial Services Fund, Infrastructure Fund, Natural Resources
Fund and Consumer Products and Services Fund should be aware that such Funds'
investment in its corresponding Portfolio may be materially affected by the
actions of large investors in such Portfolio, if any. For example, as with all
open-end investment companies, if a large investor were to redeem its interest
in a Portfolio, that Portfolio's remaining investors could experience higher pro
rata operating expenses, thereby producing lower returns. As a result, that
Portfolio's security holdings may become less diverse, resulting in increased
risk. Institutional investors in a Portfolio that have a greater pro rata
ownership interest in that Portfolio than its corresponding Fund could have
effective voting control over the operation of that Portfolio. A change in a
Portfolio's fundamental objective, policies and restrictions, which is not
approved by the shareholders of its corresponding Fund could require such Fund
to redeem its interest in the Portfolio. Any such redemption could result in a
distribution in kind of portfolio securities (as opposed to a cash distribution)
by that Portfolio. Should such a distribution occur, the Financial Services
Fund, Infrastructure Fund, Natural Resources Fund and Consumer Products and
Services Fund could incur brokerage fees or other transaction costs in
converting such securities to cash. In addition, a distribution in kind could
result in a less diversified portfolio of investments for the Financial Services
Fund, Infrastructure Fund, Natural Resources Fund and Consumer Products and
Services Fund and could affect adversely the liquidity of such Funds.
See "Management" for a complete description of the investment management fee and
other expenses associated with the investment of the Financial Services Fund,
Infrastructure Fund, Natural Resources Fund and Consumer Products and Services
Fund in their corresponding Portfolios. This Prospectus, and the Statement of
Additional Information dated March 1, 1995 contain more detailed information
about this organizational structure of the Financial Services Fund,
Infrastructure Fund, Natural Resources Fund and Consumer Products and Services
Fund and their corresponding Portfolios, including information related to: (i)
the investment objective, policies and restrictions of such Funds and their
Portfolios; (ii) the Board of Directors and officers of the Company, the
Trustees and officers of the Portfolios, the administrator of such Funds and the
investment manager and administrator of the Portfolios; (iii) portfolio
transactions and brokerage commissions; (iv) such Funds' shares, including the
rights and liabilities of its shareholders; (v) additional performance
information, including the method used to calculate yield and total return; and
(vi) the determination of the value of the shares of such Funds.
Prospectus Page 33
<PAGE>
G.T. GLOBAL THEME FUNDS
HOW TO INVEST
- --------------------------------------------------------------------------------
GENERAL. Each Fund is authorized to issue three classes of shares. Class A
shares of each Fund are sold to investors subject to an initial sales charge,
while Class B shares are sold without an initial sales charge but are subject to
higher ongoing expenses and a contingent deferred sales charge payable upon
certain redemptions. The third class of shares of the Funds, the Advisor Class,
may be offered through a separate prospectus only to certain investors.
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. See "Alternative Purchase Plan."
Orders received before the close of regular trading on the New York Stock
Exchange ("NYSE") (currently 4:00 p.m. Eastern Time, unless weather, equipment
failure or other factors contribute to an earlier closing time) on any Business
Day will be executed at the public offering price for the applicable class of
shares determined that day. A "Business Day" is any day Monday through Friday on
which the NYSE is open for business. The minimum initial investment is $500
($100 for IRAs and $25 for custodial accounts under Section 403(b)(7) of the
Code and other tax-qualified employer-sponsored retirement accounts, if made
under a systematic investment plan providing for monthly payments of at least
that amount), and the minimum for additional purchases is $100 ($25 for IRAs,
Code Section 403 (b)(7) custodial accounts and other tax-qualified
employer-sponsored retirement accounts, as mentioned above). All purchase orders
will be executed at the public offering price next determined after the purchase
order is received, which includes any applicable sales charge for Class A
shares. See "How to Invest -- Public Offering Price." 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.
WHEN PLACING PURCHASE ORDERS, INVESTORS SHOULD SPECIFY WHETHER THE ORDER IS FOR
CLASS A OR CLASS B SHARES OF THE FUNDS. ALL SHARE PURCHASE ORDERS THAT FAIL TO
SPECIFY A CLASS WILL AUTOMATICALLY BE INVESTED IN CLASS A SHARES. PURCHASES OF
$500,000 OR MORE MUST BE FOR CLASS A SHARES.
PURCHASES THROUGH BROKER/DEALERS. Shares of the Funds may be purchased through
broker/dealers with which G.T. Global has entered into dealer agreements. Orders
received by such broker/dealers before the close of regular trading on the NYSE
on a Business Day will be effected that day, provided that such order is
transmitted to the Transfer Agent prior to its close of business on such day.
The broker/dealer will be responsible for forwarding the investor's order to the
Transfer Agent so that it will be received prior to such time. After an initial
investment is made and a shareholder account is established through a broker, at
the investor's option subsequent purchases may be made directly through G.T.
Global. See "Shareholder Account Manual."
Broker/dealers that do not have dealer agreements with G.T. Global also may
offer to place orders for the purchase of shares. Purchases made through such
broker/dealers will be effected at the public offering price next determined
after the order is received by the Transfer Agent. Such a broker/ dealer may
charge the investor a transaction fee as determined by the broker/dealer. That
fee will be in addition to the sales charge payable by the investor, with
respect to Class A shares, and may be avoided if shares are purchased through a
broker/ dealer that has a dealer agreement with G.T. Global or directly through
G.T. Global.
PURCHASES THROUGH THE DISTRIBUTOR. Investors may purchase shares and open an
account directly through G.T. Global, the Funds' distributor, by completing and
signing the Account Application located at the end of this Prospectus. Investors
should mail to the Transfer Agent the completed Application together with a
check to cover the purchase in accordance with the instructions provided in the
Shareholder Account Manual. Purchases will be executed at the public offering
price next determined after the Transfer Agent has received the Account
Application and check. Subsequent investments do not need to be accompanied by
such an application.
Investors also may purchase shares of the Funds through G.T. Global by bank
wire. Bank wire purchases will be effected at the next determined
Prospectus Page 34
<PAGE>
G.T. GLOBAL THEME FUNDS
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. The investor
is responsible for providing prior telephonic or facsimile notice to the
Transfer Agent that a bank wire is being sent. An investor's bank may charge a
service fee for wiring money to a Fund. The Transfer Agent currently does not
charge a service fee for facilitating wire purchases, but reserves the right to
do so in the future. Investors desiring to open an account by bank wire should
call the Transfer Agent at the appropriate toll-free number provided in the
Shareholder Account Manual to obtain an account number and detailed
instructions.
PURCHASING CLASS A SHARES
Each Fund's public offering price per Class A share is equal to the net asset
value per share (see "Calculation of Net Asset Value") plus a sales charge
determined in accordance with the following schedule:
<TABLE>
<CAPTION>
SALES CHARGE AS PERCENTAGE OF DEALER
AMOUNT OF REALLOWANCE
PURCHASE ------------------------------ AS PERCENTAGE
AT THE PUBLIC OFFERING NET OF THE
OFFERING PRICE PRICE INVESTMENT OFFERING PRICE
- ----------------- ------------- --------------- -----------------
<S> <C> <C> <C>
Less than
$50,000........ 4.75% 4.99% 4.25%
$50,000 but less
than
$100,000....... 4.00% 4.17% 3.50%
$100,000 but less
than
$250,000....... 3.00% 3.09% 2.75%
$250,000 but
less than
$500,000....... 2.00% 2.04% 1.75%
$500,000 or
more........... 0.00% 0.00% *
<FN>
- ------------------
* G.T. Global will pay the following commissions to brokers that initiate and
are responsible for purchases of any single purchaser of Class A shares of
$500,000 or more in the aggregate: 1.00% of the purchase amount up to $3
million, plus 0.50% on the excess over $3 million. For purposes of
determining the appropriate brokerage commission to be paid in connection
with the transaction, G.T. Global will combine purchases made by a broker
on behalf of a single client so that the broker's commission, as outlined
above, will be based on the aggregate amount of such client's share
purchases over a rolling twelve month period from the date of the
transaction.
</TABLE>
All shares purchased pursuant to a sales charge waiver based on the aggregate
purchase amount equalling at least $500,000 will be subject to a contingent
deferred sales charge for the first two years after their purchase, as described
under "Contingent Deferred Sales Charge -- Class A Shares," equal to 1% of the
lower of the original purchase price or the net asset value of such shares at
the time of redemption.
From time to time, G.T. Global may reallow to broker/dealers the full amount of
the sales charge or may pay out additional amounts to broker/dealers who sell
Class A shares. In some instances, G.T. Global may offer these reallowances or
additional payments only to broker/dealers that have sold or may sell
significant amounts of Class A shares. To the extent that G.T. Global reallows
the full amount of the sales charge to broker/dealers, such broker/dealers may
be deemed to be underwriters under the Securities Act of 1933. Commissions also
may be paid to broker/dealers and other financial institutions that initiate
purchases of at least $500,000 made pursuant to sales charge waivers (i) and
(vii), described below under "Sales Charge Waivers -- Class A Shares."
The following describes purchases that may be aggregated for purposes of
determining the "Amount of Purchase":
(a) Individual purchases on behalf of a single purchaser, the purchaser's spouse
and their children under the age of 21 years. This includes shares purchased in
connection with an employee benefit plan(s) exclusively for the benefit of such
individual(s), such as an IRA, individual Code Section 403(b) plan or
single-participant Keogh-type plan (that is, a self-employed individual
retirement plan ("Keogh Plan")). This also includes purchases made by a company
controlled by such individual(s);
(b) Individual purchases by a trustee or other fiduciary purchasing shares for a
single trust estate or a single fiduciary account, including an employee benefit
plan (such as employer-sponsored pension, profit-sharing and stock bonus plans,
including Section 401(k) plans, and medical, life and disability insurance
trusts) other than a plan described in "(a)" above;
or
(c) Individual purchases by a trustee or other fiduciary purchasing shares
concurrently for two or more employee benefit plans of a single employer or of
employers affiliated with each other (again excluding an employee benefit plan
described in "(a)" above).
Prospectus Page 35
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G.T. GLOBAL THEME FUNDS
SALES CHARGE WAIVERS -- CLASS A SHARES. Class A shares are sold at net asset
value without imposition of sales charges when investments are made by the
following classes of investors:
(i) Trustees or other fiduciaries purchasing shares for employee benefit plans
which are sponsored by organizations which have at least 100 but less than 250
employees.
(ii) Current or retired Trustees, Directors and officers of the investment
companies for which G.T. Capital serves as investment manager and/or
administrator; employees or retired employees of the companies comprising the
G.T. Group or affiliated companies of the G.T. Group; the children, siblings and
parents of the persons in the foregoing categories; and trusts primarily for the
benefit of such persons.
(iii) Registered representatives or full-time employees of broker/dealers which
have entered into dealer agreements with G.T. Global, and the children, siblings
and parents of such persons, and employees of financial institutions that
directly, or through their affiliates, have entered into dealer agreements with
G.T. Global (or that otherwise have an arrangement with respect to sales of Fund
shares with a broker/dealer that has entered into a dealer agreement with G.T.
Global) and the children, siblings and parents of such employees.
(iv) Companies exchanging shares with or selling assets to one or more of the
G.T. Global Mutual Funds pursuant to a merger, acquisition or exchange offer.
(v) Shareholders of any of the G.T. Global Mutual Funds as of April 30, 1987 who
since that date continually have owned shares of one or more of the G.T. Global
Mutual Funds.
(vi) Purchases made through the automatic investment of dividends and other
distributions paid by any of the other G.T. Global Mutual Funds.
(vii) Registered investment advisers, trust companies and bank trust
departments exercising DISCRETIONARY investment authority with respect to the
money to be invested in the G.T. Global Mutual Funds provided that the aggregate
amount invested pursuant to this sales charge waiver is at least $500,000, and
further provided that such money is not eligible to be invested in the Advisor
Class.
(viii) Clients of administrators of tax-qualified employee benefit plans which
have entered into agreements with G.T. Global.
(ix) Retirement plan participants who borrow from their retirement accounts by
redeeming G.T. Global Mutual Fund shares and subsequently repay such loans via a
purchase of a Fund's shares.
(x) Retirement plan participants who receive distributions from a tax-qualified
employer-sponsored retirement plan, which is invested in G.T. Global Mutual
Funds, the proceeds of which are reinvested in Funds' shares.
(xi) Accounts not eligible for the Advisor Class as to which a financial
institution or broker/dealer charges an account management fee, provided the
financial institution or broker/dealer has entered into an agreement with G.T.
Global regarding such accounts.
REINSTATEMENT PRIVILEGE. Shareholders who redeem their Class A shares in a Fund
have a one-time privilege of reinstating their investment by investing the
proceeds of the redemption at net asset value without a sales charge in Class A
shares of that Fund and/or one or more of the other G.T. Global Mutual Funds.
The Transfer Agent must receive from the investor or the investor's
broker/dealer within 180 days after the date of the redemption both a written
request for reinvestment and a check not exceeding the amount of the redemption
proceeds. The reinstatement purchase will be effected at the net asset value per
share next determined after such receipt. For a discussion of the federal income
tax consequences of a reinstatement, see "Dividends, Other Distributions and
Federal Income Taxation -- Taxes."
REDUCED SALES CHARGE PLANS -- CLASS A SHARES. Class A shares may be purchased at
reduced sales charges either through the Right of Accumulation or under a Letter
of Intent. For more details on these plans, investors should contact their
broker/ dealers or the Transfer Agent.
RIGHT OF ACCUMULATION. Pursuant to the Right of Accumulation, investors are
permitted to purchase shares of a Fund at the sales charge applicable to the
total of (a) the dollar amount then being purchased plus (b) the dollar amount
of the investor's concurrent purchases of other G.T. Global Mutual Funds (other
than G.T. Global Dollar Fund) plus (c) the price of all shares of G.T. Global
Mutual Funds (other than shares of G.T. Global Dollar Fund not acquired by
exchange) already held by the investor. To receive the Right of Accumulation, at
the time of purchase investors must give their broker/dealer, the Transfer Agent
or G.T. Global sufficient information to permit confirmation of qualification.
THE FOREGOING RIGHT OF
Prospectus Page 36
<PAGE>
G.T. GLOBAL THEME FUNDS
ACCUMULATION APPLIES ONLY TO CLASS A SHARES OF THE FUND AND CLASS A SHARES OF
THE OTHER G.T. GLOBAL MUTUAL FUNDS (OTHER THAN G.T. GLOBAL DOLLAR FUND).
LETTER OF INTENT. In executing a Letter of Intent ("LOI"), an investor indicates
an aggregate investment amount he or she intends to invest in the Class A shares
of a Fund and the Class A shares of other G.T. Global Mutual Funds (other than
G.T. Global Dollar Fund) in the following thirteen months. The LOI is included
as part of the Account Application located at the end of this Prospectus. The
sales charge applicable to that aggregate amount then becomes the applicable
sales charge on all purchases made concurrently with the execution of the LOI
and in the thirteen months following that execution. If an investor executes an
LOI within 90 days of a prior purchase of G.T. Global Mutual Fund Class A shares
(other than shares of G.T. Global Dollar Fund), the prior purchase may be
included under the LOI and an appropriate adjustment, if any, with respect to
the sales charges paid by the investor in connection with the prior purchase
will be made, based on the then-current net asset value(s) of the pertinent
Fund(s).
If at the end of the thirteen month period covered by the LOI the total amount
of purchases does not equal the amount indicated, the investor will be required
to pay the difference between the sales charges paid at the reduced rate and the
sales charges applicable to the purchases actually made. Shares having a value
equal to 5% of the amount specified in the LOI will be held in escrow during the
thirteen month period (while remaining registered in the investor's name) and
are subject to redemption to assure any necessary payment to G.T. Global of a
higher applicable sales charge.
For purposes of an LOI, any registered investment adviser, trust company or bank
trust department which exercises investment discretion and which intends within
thirteen months to invest $500,000 or more can be treated as a single purchaser,
provided further that such entity places all purchase and redemption orders.
Such entities should be prepared to establish their qualifications for such
treatment. THE FOREGOING LETTER OF INTENT APPLIES ONLY TO CLASS A SHARES OF THE
FUNDS AND OTHER G.T. GLOBAL MUTUAL FUNDS (OTHER THAN G.T. GLOBAL DOLLAR FUND).
THE VALUE OF CLASS B SHARES OF ANY G.T. GLOBAL MUTUAL FUND WILL NOT BE COUNTED
TOWARD THE FULFILLMENT OF AN LOI.
CONTINGENT DEFERRED SALES CHARGE -- CLASS A SHARES. Purchases of Class A shares
of $500,000 or more may be made without an initial sales charge. Purchases of
Class A shares of two or more G.T. Global Mutual Funds (other than the G.T.
Global Dollar Fund) may be combined for this purpose, and the Right of
Accumulation also applies to such purchases. If a shareholder within two years
after the date of purchase redeems any Class A shares that were purchased
without a sales charge by reason of a purchase of $500,000 or more as described
above under "Purchasing Class A Shares," a contingent deferred sales charge of
1% of the lower of the original purchase price or the net asset value of such
shares at the time of redemption will be charged. Class A shares that are
redeemed will not be subject to the contingent deferred sales charge to the
extent that the value of such shares represents (1) reinvestment of dividends or
other distributions or (2) Class A shares redeemed more than two years after
their purchase. Such shares purchased in amounts of at least $500,000 without a
sales charge may be exchanged for Class A shares of another G.T. Global Mutual
Fund (other than G.T. Global Dollar Fund) without the imposition of a contingent
deferred sales charge, although the contingent deferred sales charge described
above will apply to the redemption of the shares acquired through an exchange.
The waivers set forth under "Contingent Deferred Sales Charge Waivers" below are
applied to redemptions of Class A shares upon which a contingent deferred sales
charge is imposed. For federal income tax purposes, the amount of the contingent
deferred sales charge will reduce the gain or increase the loss, as the case may
be, on the amount realized on redemption. The amount of any contingent deferred
sales charge will be paid to G.T. Global.
PURCHASING CLASS B SHARES
The public offering price of the Class B shares of the Funds is the next
determined net asset value per share. No initial sales charge is imposed. A
contingent deferred sales charge, however, is imposed on certain redemptions of
Class B shares. Since the Class B shares are sold without an initial sales
charge, the Fund receives the full amount of the investor's purchase payment.
Class B shares of the Funds that are redeemed will not be subject to a
contingent deferred sales charge to the extent that the value of such shares
represents: (1) reinvestment of dividends or capital gain distributions or (2)
shares redeemed more than
Prospectus Page 37
<PAGE>
G.T. GLOBAL THEME FUNDS
six years after their purchase. Redemptions of most other Class B shares will be
subject to a contingent deferred sales charge. See "Contingent Deferred Sales
Charge Waivers." The amount of any applicable contingent deferred sales charge
will be calculated by multiplying the lesser of the original purchase price or
the net asset value of such shares at the time of redemption by the applicable
percentage shown in the table below. Accordingly, no charge is imposed on
increases in net asset value above the original purchase price:
<TABLE>
<CAPTION>
CONTINGENT DEFERRED SALES CHARGE
AS A PERCENTAGE OF THE LESSER OF
NET ASSET VALUE AT REDEMPTION OR
REDEMPTION DURING THE ORIGINAL PURCHASE PRICE
- --------------------------- ---------------------------------
<S> <C>
1st Year Since Purchase.... 5%
2nd Year Since Purchase.... 4%
3rd Year Since Purchase.... 3%
4th Year Since Purchase.... 3%
5th Year Since Purchase.... 2%
6th year Since Purchase.... 1%
Thereafter................. 0%
</TABLE>
In determining whether a contingent deferred sales charge is applicable to a
redemption, the calculation will be made in a manner that results in the lowest
possible rate. It will be assumed that the redemption is made first of amounts
representing shares acquired pursuant to the reinvestment of dividends and
distributions; then of amounts representing the cost of shares purchased seven
years or more prior to the redemption; and finally, of amounts representing the
cost of shares held for the longest period of time within the applicable
six-year period.
For example, assume an investor purchased 100 shares at $10 per share for a cost
of $1,000. Subsequently, the shareholder acquired 15 additional shares through
dividend reinvestment. During the second year after the purchase the investor
decided to redeem $500 of his or her investment. Assuming at the time of the
redemption a net asset value of $11 per share, the value of the investor's
shares would be $1,265 (115 shares at $ 11 per share). The contingent deferred
sales charge would not be applied to the value of the reinvested dividend
shares. Therefore, the 15 shares currently valued at $165.00 would be sold
without a contingent deferred sales charge. The number of shares needed to fund
the remaining $335 of the redemption would equal 30.455. Using the lower of cost
or market price to determine the contingent deferred sales charge, the original
purchase price of $10.00 per share would be used. The contingent deferred sales
charge calculation would therefore be 30.455 shares times $10.00 per share at
the contingent deferred sales charge rate of 4% (the applicable rate in the
second year after purchase) for a total contingent deferred sales charge of
$12.18.
For federal income tax purposes, the amount of the contingent deferred sales
charge will reduce the gain or increase the loss, as the case may be, on the
amount recognized on the redemption of shares. The amount of any contingent
deferred sales charge will be paid to G.T. Global.
CONTINGENT DEFERRED SALES
CHARGE WAIVERS
The contingent deferred sales charge will be waived for exchanges, as described
below, and for redemptions in connection with a Fund's systematic withdrawal
plan not in excess of 12% of the value of the account annually. In addition, the
contingent deferred sales charge will be waived in the following circumstances:
(1) total or partial redemptions made within one year following the death or
disability of a shareholder; (2) minimum required distributions made in
connection with a G.T. Global IRA, Keogh Plan or custodial account under Section
403(b) of the Code or other retirement plan following attainment of age 70 1/2;
(3) total or partial redemptions resulting from a distribution following
retirement in the case of a tax-qualified employer-sponsored retirement plan;
(4) when a redemption results from a tax-free return of an excess contribution
pursuant to Section 408(d)(4) or (5) of the Code or from the death or disability
of the employee; (5) a one-time reinvestment in Class B shares of a Fund within
180 days of a prior redemption; (6) redemptions pursuant to a Fund's right to
liquidate a shareholder's account involuntarily; (7) redemptions pursuant to
distributions from a tax-qualified employer-sponsored retirement plan, which is
invested in G.T. Global Mutual Funds, which are permitted to be made without
penalty pursuant to the Code, other than tax-free rollovers or transfers of
assets, and the proceeds of which are reinvested in Fund shares; (8) redemptions
made in connection with participant-directed exchanges between options in an
employer-sponsored benefit plan; (9) redemptions made for the purpose of
providing cash to fund a loan to a participant in a tax-qualified retirement
plan; (10) redemptions made in connection with a distribution from any
retirement plan or account that is permitted in accordance with the provisions
of Section 72(t)(2) of the Code, and the regulations promulgated thereunder;
(11) redemptions made in connection with
Prospectus Page 38
<PAGE>
G.T. GLOBAL THEME FUNDS
a distribution from any retirement plan or account that involves the return of
an excess deferral amount pursuant to Section 401(k)(8) or Section 402(g)(2) of
the Code or the return of excess aggregate contributions pursuant to Section
401(m)(6) of the Code; (12) redemptions made in connection with a distribution
(from a qualified profit-sharing or stock bonus plan described in Section 401(k)
of the Code) to a participant or beneficiary under Section 401(k)(2)(B)(IV) of
the Code upon hardship of the covered employee (determined pursuant to Treasury
Regulation Section 1.401(k)-1(d)(2)); and (13) redemptions made by or for the
benefit of certain states, counties or cities, or any instrumentalities,
departments or authorities thereof where such entities are prohibited or limited
by applicable law from paying a sales charge or commission.
PROGRAMS APPLICABLE TO CLASS A SHARES AND CLASS B SHARES
AUTOMATIC INVESTMENT PLAN. Investors may purchase either Class A or Class B
shares of a Fund through the G.T. Global Automatic Investment Plan. Under this
Plan, an amount specified by the shareholder of $100 or more ($25 or more for
IRAs, Code Section 403(b)(7) custodial accounts and other tax-qualified
employer-sponsored retirement accounts) on a monthly or quarterly basis will be
sent to the Transfer Agent from the investor's bank for investment in the Funds.
Participants in the Automatic Investment Plan should not elect to receive
dividends or other distributions from the Funds in cash. To participate in the
Automatic Investment Plan, investors should complete the appropriate portion of
the Supplemental Application provided at the end of this Prospectus. Investors
should contact their brokers or G.T. Global for more information.
DOLLAR COST AVERAGING PROGRAM. Dollar cost averaging is a systematic,
disciplined investment method through which a shareholder invests the same
dollar amount each month. Accordingly, the investor purchases more shares when a
Fund's net asset value is relatively low and fewer shares when a Fund's net
asset value is relatively high. This can result in a lower average
cost-per-share than if the shareholder followed a less systematic approach. The
G.T. Dollar Cost Averaging Program provides a convenient means for investors to
use this method to purchase either Class A or Class B shares of the G.T. Global
Mutual Funds. Dollar cost averaging does not assure a profit and does not
protect against loss in declining markets. Because such a program involves
continuous investment in securities regardless of fluctuating price levels of
such securities, investors should consider their financial ability to continue
purchases through periods of low price levels.
A participant in the G.T. Dollar Cost Averaging Program first designates the
size of his or her monthly investment in a Fund ("Monthly Investment") after
participation in the Program begins. The Monthly Investment must be at least
$1,000. The investor then will make an initial investment of at least $10,000 in
the G.T. Global Dollar Fund. Thereafter, each month an amount equal to the
specified Monthly Investment automatically will be redeemed from the G.T. Global
Dollar Fund and invested in Fund shares. A sales charge will be applied to each
automatic monthly purchase of Class A Fund shares in an amount determined in
accordance with the Right of Accumulation privilege described above. For more
information about the G.T. Dollar Cost Averaging Program, investors should
consult their brokers or G.T. Global.
CERTIFICATES. In the interest of economy and convenience, physical certificates
representing the Funds' shares will not be issued unless an investor submits a
written request to the Transfer Agent, or unless the investor's broker requests
that the Transfer Agent provide certificates. Shares of the Funds 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 39
<PAGE>
G.T. GLOBAL THEME FUNDS
HOW TO MAKE EXCHANGES
- --------------------------------------------------------------------------------
Shares of any Fund may be exchanged for shares of any of the other G.T. Global
Mutual Funds (including the other Funds), based on their respective net asset
values without imposition of any sales charges, provided that the registration
remains identical. 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. CLASS A SHARES MAY BE EXCHANGED ONLY FOR CLASS A SHARES OF
OTHER G.T. GLOBAL MUTUAL FUNDS. CLASS B SHARES MAY BE EXCHANGED ONLY FOR CLASS B
SHARES OF OTHER G.T. GLOBAL MUTUAL FUNDS. The exchange of Class B shares will
not be subject to a contingent deferred sales charge. For purposes of computing
the contingent deferred sales charge, the length of time of ownership of Class B
shares will be measured from the date of original purchase and will not be
affected by the exchange. EXCHANGES ARE NOT TAX-FREE AND WILL RESULT IN A
SHAREHOLDER 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 EMERGING MARKETS FUND
-- G.T. GLOBAL: NEW PACIFIC GROWTH FUND*
-- G.T. GLOBAL: EUROPE GROWTH FUND
-- G.T. LATIN AMERICA 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 the 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. If an investor does not
surrender all of his or her shares in an exchange, the remaining balance in the
investor's account after the exchange must be at least $500. Exchange requests
received in good order by the Transfer Agent before the close of regular trading
on the NYSE on any Business Day will be processed at the net asset value
calculated on that day.
An investor interested in making an exchange should write or call his or her
broker/dealer or the Transfer Agent to request the prospectus of the other G.T.
Global Mutual Fund(s) being considered. Certain broker/dealers may charge a fee
for handling exchanges.
EXCHANGES BY TELEPHONE. A shareholder may give exchange instructions to the
shareholder's broker/ dealer or the Transfer Agent by telephone at the
appropriate toll-free number provided in the Shareholder Account Manual.
Exchange orders will be accepted by telephone provided that the exchange
involves only uncertificated shares on deposit in the shareholder's account or
for which certificates have previously been deposited. 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 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.
EXCHANGES BY MAIL. Exchange orders should be sent by mail to the investor's
broker/dealer or to the Transfer Agent at the address set forth in the
Shareholder Account Manual.
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 the Funds' or G.T. Global's
refusal to accept further purchase and exchange orders from the investor or
broker/dealer. The terms of the exchange offer described above may be modified
at any time, on 60 days' prior written notice to shareholders.
Prospectus Page 40
<PAGE>
G.T. GLOBAL THEME FUNDS
HOW TO REDEEM SHARES
- --------------------------------------------------------------------------------
As described below, Fund shares may be redeemed at their net asset value
(subject to any applicable contingent deferred sales charge for Class B shares
or, in limited circumstances, Class A shares) and redemption proceeds will be
sent within seven days of the execution of a redemption request. Shareholders
with broker/dealers who sell shares may redeem shares through such
broker/dealers; if the shares are held in the broker/dealer's "street name" the
redemption must be made through the broker/dealer. Other shareholders may redeem
shares through the Transfer Agent. If a redeeming shareholder owns both Class A
and Class B shares of the Funds, the Class A shares will be redeemed first
unless the shareholder specifically requests otherwise.
REDEMPTIONS THROUGH BROKER/DEALERS. Shareholders with accounts at broker/dealers
who sell shares of the Funds may submit redemption requests to such
broker/dealers. Broker/dealers may honor a redemption request either by
repurchasing shares from a redeeming shareholder at the Funds' shares' net asset
value next computed after the broker/dealer receives the request or by
forwarding such requests to the Transfer Agent (see "How to Redeem Shares --
Redemptions Through the Transfer Agent"). Redemption proceeds (less any
applicable contingent deferred sales charge for Class B shares) normally will be
paid by check or, if offered by the broker/dealer, credited to the shareholder's
brokerage account at the election of the shareholder. Broker/dealers may impose
a service charge for handling redemption transactions placed through them and
may have other requirements concerning redemptions. Accordingly, shareholders
should contact their broker/dealers for more details.
REDEMPTIONS THROUGH THE TRANSFER AGENT. Redemption requests may be transmitted
to the Transfer Agent by telephone or by mail, in accordance with the
instructions provided in the Shareholder Account Manual. All redemptions will be
effected at the net asset value next determined after the Transfer Agent has
received the request in good order and any required supporting documentation
(less any applicable contingent deferred sales charge for Class B shares).
Redemption requests received before the close of regular trading on the NYSE on
a 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. A shareholder with questions concerning the Funds'
signature guarantee requirement should contact the Transfer Agent.
Shareholders may qualify to have redemption proceeds sent to a Pre-Designated
Account by completing the appropriate section of the Account Application at the
end of this Prospectus. Shareholders with Pre-Designated Accounts should request
that redemption proceeds be sent either by bank wire or by check. The minimum
redemption amount for a bank wire is $1,000. Shareholders requesting a bank wire
should allow two business days from the time the redemption request is effected
for the proceeds to be deposited in the shareholder's Pre-Designated Account.
See "How to Redeem Shares -- Other Important Redemption Information."
Shareholders may change their Pre-Designated Accounts only by a letter of
instruction to the Transfer Agent containing all account signatures, each of
which must be guaranteed. The Transfer Agent currently does not charge a bank
wire service fee for each wire redemption sent, but reserves the right to do so
in the future.
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
Prospectus Page 41
<PAGE>
G.T. GLOBAL THEME FUNDS
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
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.
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 registered account owner(s) and/or requests that redemption
proceeds be mailed to an address other than the shareholder's address of record
require a signature guarantee. In addition, if the shareholder's address of
record has been changed within the preceding thirty days, a signature guarantee
is required. Redemptions of shares for which certificates have been issued must
be accompanied by properly endorsed share certificates.
SYSTEMATIC WITHDRAWAL PLAN. Shareholders owning shares with a value of $10,000
or more may participate in the G.T. Global Systematic Withdrawal Plan. A
participating shareholder will receive proceeds from monthly, quarterly or
annual redemptions of Fund shares with respect to either Class A or Class B
shares. No contingent deferred sales charge will be imposed on redemptions made
under the Systematic Withdrawal Plan. The minimum withdrawal amount is $100. The
amount or percentage a participating shareholder specifies to be redeemed may
not, on an annualized basis, exceed 12% of the value of the account, as of the
time the shareholder elects to participate in the Systematic Withdrawal Plan. To
participate in the Systematic Withdrawal Plan, investors should complete the
appropriate portion of the Supplemental Application provided at the end of this
Prospectus. Investors should contact their brokers or the Transfer Agent for
more information. With respect to Class A shares, participation in the
Systematic Withdrawal Plan concurrent with purchases of Class A shares may be
disadvantageous to investors because of the sales charges involved and possible
tax implications, and therefore is discouraged. In addition, shareholders who
participate in the Systematic Withdrawal Plan should not elect to reinvest
dividends or other distributions in additional Fund shares.
OTHER IMPORTANT REDEMPTION INFORMATION. A request for redemption will not be
processed until all of the necessary documentation has been received in good
order. A shareholder in doubt as to what documents are required should contact
his or her broker/dealer or the Transfer Agent.
Except in extraordinary circumstances and as permitted under the 1940 Act,
payment for shares redeemed by telephone or by mail will be made promptly after
receipt of a redemption request, if in good order, but not later than seven days
after the date the request is executed. Requests for redemption which are
subject to any special conditions or which specify a future or past effective
date cannot be accepted.
If the Transfer Agent is requested to redeem shares for which the Funds have not
yet received good payment, the Funds may delay payment of redemption proceeds
until they have assured themselves 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.
The Funds may redeem the shares of any shareholder whose account is reduced to
less than $500 in value through redemptions or other action by the shareholder.
Written notice will be given to the shareholder at least 60 days prior to the
date fixed for such redemption, during which time the shareholder may increase
his or her holdings to an aggregate amount of $500 or more (with a minimum
purchase of $100 or more).
Prospectus Page 42
<PAGE>
G.T. GLOBAL THEME FUNDS
SHAREHOLDER ACCOUNT MANUAL
- --------------------------------------------------------------------------------
Shareholders are encouraged to place purchase, exchange and redemption orders
through their broker/dealers. Shareholders also may place such orders directly
through the Transfer Agent in accordance with this Manual. See "How to Invest;"
"How to Make Exchanges;" "Dividends, Other Distributions and Federal Income
Taxation -- Taxes" and "How to Redeem Shares" for more information.
Each Fund's Transfer Agent is G.T. GLOBAL INVESTOR SERVICES, INC.
INVESTMENTS BY MAIL
Send the 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
An investor opening a new account should call 1-800-223-2138 to obtain an
account number. WITHIN SEVEN DAYS OF PURCHASE SUCH AN INVESTOR MUST SEND A
COMPLETED ACCOUNT APPLICATION CONTAINING THE INVESTOR'S CERTIFIED TAXPAYER
IDENTIFICATION NUMBER TO 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
(Stating Fund name, class of shares, shareholder's registered name and account
number)
EXCHANGES BY TELEPHONE
Call G.T. Global at 1-800-223-2138
EXCHANGES BY MAIL
Send complete instructions, including name of Fund exchanging from, class of
shares, 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, CA 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, CA 94120-7893
OVERNIGHT MAIL
Overnight mail services do not deliver to post office boxes. To send purchase,
exchange or redemption orders by overnight mail, follow the above instructions
but send the instructions to the following address:
G.T. Global Investor Services
California Plaza
2121 N. California Boulevard
Suite 450
Walnut Creek, CA 94596
ADDITIONAL QUESTIONS
Shareholders with additional questions regarding purchase, exchange and
redemption procedures should call G.T. Global at 1-800-223-2138.
Prospectus Page 43
<PAGE>
G.T. GLOBAL THEME FUNDS
CALCULATION OF NET ASSET VALUE
- --------------------------------------------------------------------------------
Each Fund calculates its net asset value as of the close of regular trading on
the floor of the NYSE (currently 4:00 p.m. Eastern Time, unless weather,
equipment failure or other factors contribute to an earlier closing time), each
Business Day. Each Fund's net asset value per share is computed by determining
the value of its total assets (which, in the case of the Financial Services
Fund, Infrastructure Fund, Natural Resources Fund and Consumer Products and
Services Fund is the value of such Funds' investment in its corresponding
Portfolio), subtracting all of each Fund's liabilities, and dividing the result
by the total number of shares outstanding at such time. Net asset value is
determined separately for each class of shares of each Fund.
Equity securities held by the Theme Portfolios are valued at the last sale price
on the exchange 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. 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 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 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 the
direction of the Company's Board of Directors or the Portfolios' Board of
Trustees, as applicable. Securities quoted in foreign currencies will be valued
in U.S. dollars based on the prevailing exchange rates on that day.
Certain of the Theme Portfolios' securities from time to time may be listed
primarily on foreign exchanges which trade on days when the NYSE is closed (such
as a Saturday). As a result, the net asset value of a Fund's shares may be
significantly affected by such trading on days when shareholders have no access
to that Fund.
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 Class B
shares of a Fund generally will be lower than that of the Class A shares of that
Fund because of the higher expenses borne by the Class B shares. It is expected,
however, that the net asset value per share of the two classes will tend to
converge immediately after the payment of dividends, which will differ by
approximately the amount of the service and distribution expense accrual
differential between the classes. The per share net asset value and dividends of
the Advisor Class shares of a Fund generally will be higher than that of the
Class A and Class B shares of that Fund because of the absence of 12b-1 service
and distribution fees with respect to Advisor Class shares.
- --------------------------------------------------------------------------------
DIVIDENDS, OTHER DISTRIBUTIONS
AND FEDERAL INCOME TAXATION
- --------------------------------------------------------------------------------
DIVIDENDS AND OTHER DISTRIBUTIONS. Each Fund annually declares as a dividend all
of 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
Prospectus Page 44
<PAGE>
G.T. GLOBAL THEME FUNDS
losses), net capital gain (the excess of net long-term capital gain over net
short-term capital loss) and net gains from foreign currency transactions, if
any. Each Fund may make an additional dividend or other distribution if
necessary to avoid a 4% excise tax on certain undistributed income and gain.
Dividends and other distributions paid by each Fund with respect to all classes
of its shares are calculated in the same manner and at the same time. The per
share income dividends on Class B shares of a Fund will be lower than the per
share income dividends on Class A shares of that Fund as a result of the higher
service and distribution fees applicable to Class B shares; the per share income
dividends on both such classes of shares of a Fund will be lower than the per
share income dividends on the Advisor Class shares of that Fund as a result of
the absence of any service and distribution fees applicable to Advisor Class
shares. SHAREHOLDERS MAY ELECT:
/ / to have all dividends and other distributions automatically reinvested in
additional Fund shares of the distributing class (or in shares of the
corresponding class of other G.T. Global Mutual Funds); or
/ / to receive dividends in cash and have other distributions automatically
reinvested in additional Fund shares of the distributing class (or in shares
of the corresponding class of other G.T. Global Mutual Funds); or
/ / to receive other distributions in cash and have dividends automatically
reinvested in additional Fund shares of the distributing class (or in shares
of the corresponding class of other G.T. Global Mutual Funds); or
/ / to receive dividends and other distributions in cash.
Automatic reinvestments in additional shares are made at net asset value without
imposition of a sales charge. IF NO ELECTION IS MADE BY A SHAREHOLDER, ALL
DIVIDENDS AND OTHER DISTRIBUTIONS WILL BE AUTOMATICALLY REINVESTED IN ADDITIONAL
FUND SHARES OF THE DISTRIBUTING CLASS. Reinvestments in another 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 qualify or continue to qualify for treatment as a
regulated investment company under the Code. In each taxable year that a Fund so
qualifies, that 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. Each Portfolio expects that it also will not be
liable for any federal income tax.
Dividends from a Fund's investment company taxable income (whether paid in cash
or reinvested in additional shares) are taxable to its shareholders as ordinary
income to the extent of the Fund's earnings and profits. Distributions of a
Fund's net capital gain, when designated as such, are taxable to its
shareholders as long-term capital gains, regardless of how long they have held
their Fund shares and whether paid in cash or reinvested in additional shares.
Each Fund provides federal tax information to its shareholders annually,
including information about dividends and other distributions paid during the
preceding year and, under certain circumstances, the shareholders' respective
shares of any foreign taxes treated as 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
Prospectus Page 45
<PAGE>
G.T. GLOBAL THEME FUNDS
Form W-8 or W-9 or Account Application is received by the Transfer Agent within
seven days after the purchase. A shareholder should contact the Transfer Agent
if the shareholder is uncertain whether a proper taxpayer identification number
is on file with a Fund.
A redemption of Fund shares may result in taxable gain or loss to the redeeming
shareholder, depending upon whether the redemption proceeds are more or less
than the shareholder's adjusted basis for the redeemed shares (which normally
includes any initial sales charge paid on Class A shares). An exchange of Fund
shares for shares of another G.T. Global Mutual Fund generally will have similar
tax consequences. However, special tax rules apply when a shareholder (1)
disposes of Class A shares of a Fund through a redemption or exchange within 90
days after purchase and (2) subsequently acquires Class A shares of such Fund or
any other G.T. Global Mutual Fund on which an initial sales charge normally is
imposed without paying a sales charge due to the reinstatement privilege or
exchange privilege. In these cases, any gain on the disposition of the original
Class A shares will be increased, or loss decreased, by the amount of the sales
charge paid when those shares were acquired, and that amount will increase the
adjusted basis of the shares subsequently acquired. In addition, if Fund shares
are purchased within 30 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 the Funds and their shareholders. See "Taxes"
in the Statement of Additional Information for a further discussion. There may
be other federal, state, local or foreign tax considerations applicable to a
particular investor. Prospective investors therefore are urged to consult their
tax advisers.
- --------------------------------------------------------------------------------
MANAGEMENT
- --------------------------------------------------------------------------------
The Company's Board of Directors has overall responsibility for the operation of
each Fund. Pursuant to such responsibility, the Board has approved contracts
with various financial organizations to provide certain services required by
each Fund. The Portfolios' Board of Trustees has overall responsibility for
operation of each Portfolio. See "Directors, Trustees, and Executive Officers"
in the Statement of Additional Information for a complete description of the
Directors of the Funds and the Trustees of the Portfolios. A majority of the
disinterested members (as defined in the 1940 Act) of the Board of Directors of
the Company and the Board of Trustees of the Portfolios have adopted written
procedures reasonably appropriate to deal with potential conflicts of interest
arising concerning the Funds and their corresponding Portfolios up to and
including creating a separate Board of Trustees of the Portfolios.
INVESTMENT MANAGEMENT AND ADMINISTRATION. Services provided by G.T. Capital as
the Theme Portfolios' investment manager and administrator include, but are not
limited to, determining the composition of the investment portfolio of the
Portfolios and placing orders to buy, sell or hold particular securities. In
addition, G.T. Capital provides the following administration services to the
Portfolios and the Funds: furnishing corporate officers and clerical staff;
providing office space, services and equipment; and supervising all matters
relating to the Portfolios' and the Funds' operation.
The Financial Services Fund, Infrastructure Fund, Natural Resources Fund and
Consumer Products and Services Fund each pays administration fees directly to
G.T. Capital at the annualized rate of 0.25% of such Fund's average daily net
assets. In addition, each such Fund bears its pro rata portion of the investment
management and administration fees paid by its corresponding Portfolio to G.T.
Capital. The Financial Services Portfolio, Infrastructure Portfolio, Natural
Resources Portfolio and Consumer Products and Services Portfolio each pays such
fees, based on the average daily net assets of such Portfolio, directly to G.T.
Capital at the annualized rate of .725% on the first $500 million, .70% on the
next $500 million, .675% on the next $500 million and
Prospectus Page 46
<PAGE>
G.T. GLOBAL THEME FUNDS
.65% on all amounts thereafter. For investment management and administration
services provided to the Health Care Fund and Telecommunications Fund, each such
Fund pays G.T. Capital a fee computed daily and paid monthly based on each such
Fund's 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
administrative 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, CA 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 January 3, 1995, aggregate assets under G.T. Group management
exceeded $22 billion, of which more than $19 billion was invested in the
securities of non-U.S. issuers.
In addition to the San Francisco office, the G.T. Group maintains 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. 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 Harrengasse
12, FL-9490, Vaduz, Liechtenstein.
In managing the Theme Portfolios, 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 Portfolio's investment objective. The investment
professionals primarily responsible for the portfolio management of the Theme
Portfolios are as follows:
GLOBAL FINANCIAL SERVICES PORTFOLIO
<TABLE>
<CAPTION>
RESPONSIBILITIES FOR BUSINESS EXPERIENCE
NAME/OFFICE THE PORTFOLIO PAST FIVE YEARS
- -------------------------------------- -------------------------------------- --------------------------------------
<S> <C> <C>
Edward R. Gomoll Portfolio manager since its inception Portfolio Manager for G.T. Capital
San Francisco in 1994
A. James Ellman Research analyst since 1994 Analyst for G.T. Capital since 1994.
San Francisco From 1992 to 1994, Mr. Ellman was a
student at the Harvard Graduate
School of Business Administration,
where he received a Master of
Business Administration. From 1990 to
1992, Mr. Ellman was employed by the
Federal Reserve Bank of New York as
an international bank examiner. Prior
thereto, he was a student at Tufts
University, where he received a
Bachelor's Degree in Economics and
History.
</TABLE>
Prospectus Page 47
<PAGE>
G.T. GLOBAL THEME FUNDS
<TABLE>
<S> <C> <C>
GLOBAL INFRASTRUCTURE PORTFOLIO
<CAPTION>
RESPONSIBILITIES FOR BUSINESS EXPERIENCE
NAME/OFFICE THE PORTFOLIO PAST FIVE YEARS
- -------------------------------------- -------------------------------------- --------------------------------------
<S> <C> <C>
David L. Sherry Co-Portfolio manager since its Investment Analyst for G.T. Capital
San Francisco inception in 1994 since 1993. From 1992 to 1993, Mr.
Sherry was Senior Securities Analyst
for Franklin Resources, Inc. (San
Mateo, CA). From 1990 to 1992, he was
a student at University of California
at Los Angeles Graduate School of
Business (where he received a Master
of Business Administration.) Prior
thereto, he was an Assistant
Treasurer with Brown Brothers
Harriman (NY).
Michael Mahoney Co-Portfolio manager since its Portfolio Manager for G.T. Capital
San Francisco inception in 1994 since 1993. From 1991 to 1993, Mr.
Mahoney was an Investment Analyst for
G.T. Capital. From 1989 to 1991, he
was a student at Stanford Graduate
School of Business (where he received
a Master of Business Administration).
Prior thereto, he was a Management
Consultant for Bain & Co., management
consulting (Boston).
GLOBAL NATURAL RESOURCES PORTFOLIO
<CAPTION>
RESPONSIBILITIES FOR BUSINESS EXPERIENCE
NAME/OFFICE THE PORTFOLIO PAST FIVE YEARS
- -------------------------------------- -------------------------------------- --------------------------------------
<S> <C> <C>
Charles A. Wall Portfolio manager since its inception Portfolio Manager for G.T. Management
Sydney in 1994 (Australia) Ltd. since 1992. Prior
thereto, Mr. Wall was a Portfolio
Manager for Baring Securities
(Sydney).
Derek H. Webb Assistant portfolio manager Analyst for G.T. Capital Management,
San Francisco since its inception in 1994 Inc. since 1992. From 1990 to 1992,
Mr. Webb was a student of the
University of Pennsylvania, Wharton
School of Business. During 1989, he
was Vice President, Citicorp
Investment Bank of Los Angeles. Prior
thereto, he was a Bond Trader, Trust
Co. of the West (Los Angeles).
</TABLE>
Prospectus Page 48
<PAGE>
G.T. GLOBAL THEME FUNDS
<TABLE>
<S> <C> <C>
GLOBAL CONSUMER PRODUCTS AND SERVICES PORTFOLIO
<CAPTION>
RESPONSIBILITIES FOR BUSINESS EXPERIENCE
NAME/OFFICE THE PORTFOLIO PAST FIVE YEARS
- -------------------------------------- -------------------------------------- --------------------------------------
<S> <C> <C>
Derek H. Webb Portfolio manager since its inception Analyst for G.T. Capital Management,
San Francisco in 1994 Inc. since 1992. From 1990 to 1992,
Mr. Webb was a student of the
University of Pennsylvania, Wharton
School of Business. During 1989, he
was Vice President, Citicorp
Investment Bank for Los Angeles.
Prior thereto, he was a Bond Trader,
Trust Co. of the West (Los Angeles).
John D. Nadell Assistant Portfolio manager since its Investment Analyst for G.T. Capital
San Francisco inception in 1994 Management, Inc. since May, 1994.
From 1990 to 1994, Mr. Nadell was an
Analyst for Pacific Equity Management
(Oakland, CA). Prior thereto, he was
an Associate Consultant of Bain &
Co., a management consultant
(Boston).
GLOBAL HEALTH CARE FUND
<CAPTION>
RESPONSIBILITIES FOR BUSINESS EXPERIENCE
NAME/OFFICE THE FUND PAST FIVE YEARS
- -------------------------------------- -------------------------------------- --------------------------------------
<S> <C> <C>
Edward R. Gomoll Portfolio manager since Fund inception Portfolio Manager for G.T. Capital
San Francisco in 1989
Michael Yellen Research analyst since 1994 Analyst for G.T. Capital since June
San Francisco 1994. From 1991 to 1994, Mr. Yellen
was a securities analyst and
co-portfolio manager for Franklin
Resources, Inc. (San Mateo, CA).
Prior thereto, Mr. Yellen was a
student at Stanford University, where
he received a Bachelor's Degree in
International Relations.
</TABLE>
Prospectus Page 49
<PAGE>
G.T. GLOBAL THEME FUNDS
<TABLE>
<S> <C> <C>
GLOBAL TELECOMMUNICATIONS FUND
<CAPTION>
RESPONSIBILITIES FOR BUSINESS EXPERIENCE
NAME/OFFICE THE FUND PAST FIVE YEARS
- -------------------------------------- -------------------------------------- --------------------------------------
<S> <C> <C>
Michael Mahoney Portfolio manager since 1993 Portfolio Manager for G.T. Capital
San Francisco since 1993. From 1991 to 1993, Mr.
Mahoney was an Investment Analyst for
G.T. Capital. From 1989 to 1991, he
was a student at Stanford Graduate
School of Business (where he received
a Master of Business Administration).
Prior thereto, he was a Management
Consultant for Bain & Co., management
consulting (Boston).
David L. Sherry Assistant portfolio manager since 1993 Investment Analyst for G.T. Capital
San Francisco since 1993. From 1992 to 1993, Mr.
Sherry was Senior Securities Analyst
for Franklin Resources, Inc. (San
Mateo, CA). From 1990 to 1992, he was
a student at University of California
at Los Angeles Graduate School of
Business (where he received a Master
of Business Administration). Prior
thereto, he was an Assistant
Treasurer with Brown Brothers
Harriman (NY).
</TABLE>
Prospectus Page 50
<PAGE>
G.T. GLOBAL THEME FUNDS
In addition, in managing the Theme Portfolios these individuals utilize the
research and related work of other members of G.T. Capital's invest-
ment staff.
In placing orders for the Theme Portfolios' securities 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 and over-the-counter ("OTC") markets often are
fixed and generally are higher than those in U.S. securities exchanges or
markets. Debt securities generally are traded on a "net" basis with a dealer
acting as principal for its own account without a stated commission, although
the price of the security usually includes a profit to the dealer. U.S. and
foreign government securities and money market instruments generally are traded
in the OTC markets. In underwritten offerings, securities usually are purchased
at a fixed price which includes an amount of compensation to the underwriter. On
occasion, securities may be purchased directly from an issuer, in which case no
commissions or discounts are paid. Broker/dealers may receive commissions on
futures, currency and options transactions. Consistent with its obligation to
obtain 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 for the Theme
Portfolios may be executed through any of the BIL G.T. Group affiliates.
G.T. Capital anticipates that the annual turnover rate of each Theme Portfolio
will not exceed 100%. However, G.T. Capital does not regard portfolio turnover
as a limiting factor and will buy or sell securities for each Theme Portfolio as
necessary in response to market conditions to meet each Theme Portfolio's
objective of long-term growth of capital. The portfolio turnover rate is
calculated by dividing the lesser of sales or purchases of portfolio securities
by each Theme Portfolio'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 the Theme Portfolios will bear directly, and may result in
the realization of net capital gains, which are taxable when distributed to each
Fund's shareholders.
DISTRIBUTION OF FUND SHARES. G.T. Global is the distributor, or principal
underwriter, of the Funds' Class A and Class B 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, CA 94111. As distributor, G.T. Global collects the
sales charges imposed on purchases of Class A shares and any contingent deferred
sales charges that may be imposed on certain redemptions of Class A and Class B
shares. G.T. Global reallows a portion of the sales charge on Class A shares to
broker/dealers that have sold such shares in accordance with the schedule set
forth above under "How to Invest." In addition, G.T. Global pays a brokerage
commission equal to 4.00% of the amount invested to broker/dealers who sell
Class B shares. A brokerage commission with respect to Class B shares is not
paid on exchanges or certain reinvestments in Class B shares.
G.T. Global, at its own expense, may provide additional promotional incentives
to broker/dealers that sell shares of a Fund and/or shares of the other G.T.
Global Mutual Funds. In some instances additional compensation or promotional
incentives may be offered to broker/dealers that have sold or may sell
significant amounts of shares during specified periods of time. Such
compensation and incentives may include, but are not limited to, cash,
merchandise, trips and financial assistance to brokers in connection with
preapproved conferences or seminars, sales or training programs for invited
sales personnel, payment for travel expenses (including meals and lodging)
incurred by sales personnel and members of their families or other invited
guests to various locations for such seminars or training programs, seminars for
the public, advertising and sales campaigns regarding one or more of the G.T.
Global Mutual Funds, and/or other events sponsored by the broker/dealer. In
addition, G.T. Global makes ongoing payments to brokerage firms, financial
institutions (including banks) and others that facilitate the administration and
servicing of shareholder accounts.
Under a plan of distribution adopted by the Company's Board of Directors
pursuant to Rule 12b-1 under the 1940 Act, with respect to each Fund's Class A
shares ("Class A Plan"), each Fund may pay G.T. Global a service fee at the
annualized rate of up to 0.25% of the average daily net assets of such Fund's
Class A shares for its expenditures incurred in servicing and maintaining
shareholder accounts, and may pay G.T. Global a distribution fee at the
annualized rate of up to
Prospectus Page 51
<PAGE>
G.T. GLOBAL THEME FUNDS
0.50% of the average daily net assets of each such Fund's Class A shares, less
any amounts paid by that Fund as the aforementioned service fee for its
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 a separate plan of distribution adopted with respect to each Fund's
Class B shares ("Class B Plan"), each 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 such
Fund's Class B shares for its 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 such Fund's
Class B shares for its expenditures incurred in providing services as
distributor. Expenses incurred under the Class B Plan in excess of 1.00%
annually may be carried forward for reimbursement in subsequent years as long as
such Plan continues in effect.
G.T. Global's service and distribution expenses include the payment of ongoing
commissions; the cost of any additional compensation paid by G.T. Global to
broker/dealers; the costs of printing and mailing to prospective investors
prospectuses and other materials relating to the Funds; the costs of developing,
printing, distributing and publishing advertisements and other sales literature;
and allocated costs relating to G.T. Global's distribution activities,
including, among other things, employee salaries, bonuses and other overhead
expenses. In addition, its expenses under the Class B Plan include payment of
initial sales commissions to broker/dealers and interest on any unreimbursed
amounts carried forward thereunder.
The Glass-Steagall Act and other applicable laws, among other things, generally
prohibit federally chartered or supervised banks from engaging in the business
of underwriting or distributing securities. Accordingly, G.T. Global intends to
engage banks (if at all) only to perform administrative and shareholder
servicing functions. If a bank were prohibited from so acting, its shareholder
clients would be permitted to remain shareholders, and alternative means for
continuing the servicing of such shareholders would be sought. It is not
expected that shareholders would suffer any adverse financial consequences as a
result of any of these occurrences.
Prospectus Page 52
<PAGE>
G.T. GLOBAL THEME FUNDS
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 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 Investment Plan, Systematic Withdrawal Plan and automatic dividend
reinvestment program may be provided quarterly. Shortly after the end of each
Fund's fiscal year on October 31 and fiscal half-year on April 30 of each year,
shareholders receive an annual and semiannual report, respectively. These
reports list the securities held by each Fund and contain each Fund's financial
statements. In addition, the federal income status of distributions made by a
Fund 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 and is registered with the SEC as an open-end management investment
company. 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 each Fund are entitled to one vote per share
(with proportional voting for fractional shares) and are freely transferable.
Shareholders have no preemptive or conversion rights.
On any matter submitted to a vote of shareholders, shares of a Fund will be
voted by a Fund's shareholders individually when the matter affects the specific
interest of that Fund only, such as approval of its 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 each Fund and 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 selection by the Board of
Directors of the Company's independent accountants.
Normally there will be no annual meeting of shareholders in any year, except as
required under the 1940 Act. Each Fund 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
each Fund and of the Company's other 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 shares 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.
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, 100 million shares as Class A shares and 100 million shares
as Class B shares, except for the Telecommunications Fund, of which 200 million
shares have each been classified as Class A shares and Class B shares,
respectively. One hundred million shares have been classified as Advisor Class
shares for each Fund. These amounts may be increased from time to time in the
discretion of the Board of Directors. Each share of each Fund represents an
interest in that Fund only, has a par value of $0.0001 per share, represents an
equal proportionate interest in that Fund with other shares of that Fund and is
entitled to such dividends and other distributions out of the income earned and
gain realized on the assets belonging to that Fund as may be declared at the
discretion of the Board of Directors. Each Class A, Class B and Advisor Class
share of each 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 each Fund when issued are fully paid and
nonassessable.
ORGANIZATION OF THE PORTFOLIOS. Each Portfolio is organized as a subtrust of a
New York common law trust. The Declaration of Trust provides that the Financial
Services Fund, Infrastructure Fund,
Prospectus Page 53
<PAGE>
G.T. GLOBAL THEME FUNDS
Natural Resources Fund and Consumer Products and Services Fund and other
entities investing in its corresponding Portfolio (E.G., other investment
companies, insurance company separate accounts and common and commingled trust
funds), if any, each will be liable for all obligations of that Portfolio.
However, the Directors of the Company believe that the risk of such Funds'
incurring financial loss because of such liability is limited to circumstances
in which both inadequate insurance existed and each of the Portfolios itself was
unable to meet its obligations, and that neither the Financial Services Fund,
Infrastructure Fund, Natural Resources Fund and Consumer Products and Services
Fund nor their shareholders will be exposed to a material risk of liability by
reason of the Funds' investing in their corresponding Portfolios.
Whenever the Financial Services Fund, Infrastructure Fund, Natural Resources
Fund and Consumer Products and Services Fund is requested to vote on any
proposal of its corresponding Portfolio, such Fund will hold a meeting of such
Fund's shareholders and will cast its vote as instructed by its shareholders. As
is true for many investment companies, a majority of the outstanding voting
securities can control the results of certain shareholder votes. Because a
Portfolio investors' votes are proportionate to their percentage interests in
that Portfolio, one or more other Portfolio investors could, in certain
instances, approve an action against which a majority of the outstanding voting
securities of its corresponding Fund had voted. This could result in that Fund's
redeeming its investment in its corresponding Portfolio, which could result in
increased expenses for that Fund. Whenever the shareholders of the Financial
Services Fund, Infrastructure Fund, Natural Resources Fund and Consumer Products
and Services Fund are called to vote on matters related to its corresponding
Portfolio, the Directors of the Company shall vote shares for which they receive
no voting instructions in the same proportion as the shares for which they do
receive voting instructions. Any information received from the Financial
Services Portfolio, Infrastructure Portfolio, Natural Resources Portfolio and
Consumer Products and Services Portfolio in the Portfolio's report to
shareholders will be provided to the shareholders of its corresponding Fund.
Each investor in a Portfolio, including its corresponding Fund, may add to or
reduce its investment in that Portfolio on each day the NYSE is open for
trading. As of the close of regular trading on the NYSE on each such day, the
value of each such investor's beneficial interest in that Portfolio will be
determined by multiplying the net asset value of that Portfolio by the
percentage, effective for that day, which represents that investor's share of
the aggregate beneficial interests in that Portfolio. Any additions or
reductions, which are to be effected as of the close of the regular trading on
the NYSE, on such day, will then be effected. The investor's percentage of the
aggregate beneficial interests in that Portfolio will then be recomputed as the
percentage equal to the fraction (i) the numerator of which is the value of such
investor's investment in that Portfolio as of the close of regular trading on
the NYSE, on such day plus or minus, as the case may be, the amount of net
additions to or reductions from the investor's investment in that Portfolio
effected as of that time, and (ii) the denominator of which is the aggregate net
asset value of that Portfolio as of that time, on such day, plus or minus, as
the case may be, the amount of net additions to or reductions from the aggregate
investments in that Portfolio by all investors in that Portfolio. The percentage
so determined will then be applied to determine the value of the investor's
interest in that Portfolio as of the close of regular trading on the NYSE, on
the following day the NYSE is open for trading.
Each Fund, except the Health Care Fund, is classified as a "diversified" fund
under the 1940 Act, which means that, with respect to 75% of the Fund's total
assets: (i) no more than 5% will be invested in the securities of any one
issuer, and (ii) each Fund will purchase no more than 10% of the outstanding
voting securities of any one issuer. The Health Care Fund is a "non-diversified"
investment company under the 1940 Act, which means that, with respect to 50% of
the Fund's total assets, no more than 5% may be invested in the securities of a
single issuer.
SHAREHOLDER INQUIRIES. Shareholder inquiries may be made by calling the Funds
toll-free at (800) 223-2138 or by writing to the Fund at 50 California Street,
27th Floor, San Francisco, California 94111.
PERFORMANCE INFORMATION. The Funds, from time to time, may include information
on their 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.
Prospectus Page 54
<PAGE>
G.T. GLOBAL THEME FUNDS
In such materials, the Funds may quote their 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 a
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 a
Fund. Standardized Return assumes the reinvestment of all dividends and other
distributions at net asset value on the reinvestment date as established by the
Board of Directors.
In addition, in order to more completely represent the Funds' performance or
more accurately compare such performance to other measures of investment return,
the Funds 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) and
assumes reinvestment of all dividends and other distributions. Non-Standardized
Return may be quoted for the same or different periods as those for which
Standardized Return is quoted; it may consist of an aggregate or average annual
percentage rate of return, actual year-by-year rates or any combination thereof.
Non-Standardized Return may or may not take sales charges into account;
performance data calculated without taking the effect of sales charges into
account will be higher than data including the effect of such charges.
The Funds' performance data will reflect past performance and will not
necessarily be indicative of future results. The Funds' 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 the Fund's investment
results with those published for other investment companies, other investment
vehicles and unmanaged indices. The Funds' results also should be considered
relative to the risks associated with its investment objective and policies. The
Funds will include performance data for all classes of shares of the Funds in
any advertisement or information including performance data for the Funds. 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, a subsidiary of
BIL GT Group and maintains offices at 50 California Street, 27th Floor, San
Francisco, CA 94111.
CUSTODIAN AND ACCOUNTING AGENT. State Street Bank and Trust Company, 225
Franklin Street, Boston, Massachusetts 02110, is custodian of the assets of the
Portfolios, Health Care Fund and Telecommunications Fund and serves as each
Fund's and each Portfolio's accounting agent.
COUNSEL. The law firm of Kirkpatrick & Lockhart, 1800 M Street, N.W.,
Washington, D.C. 20036-5891, acts as counsel to the Company and to the Theme
Portfolios. Kirkpatrick & Lockhart also acts as counsel to G.T. Capital, G.T.
Global and G.T. Services in connection with other matters.
INDEPENDENT ACCOUNTANTS. The Theme Portfolios' independent accountants are
Coopers & Lybrand L.L.P., One Post Office Square, Boston, Massachusetts 02109.
Coopers & Lybrand L.L.P. conducts an annual audit of the Funds and Portfolios,
assists in the preparation of the Funds' and Portfolios' federal and state
income tax returns and consults with the Company and the Funds and the
Portfolios 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 55
<PAGE>
G.T. GLOBAL THEME FUNDS
NOTES
- --------------------------------------------------------------------------------
Prospectus Page 56
<PAGE>
G.T. GLOBAL THEME FUNDS
NOTES
- --------------------------------------------------------------------------------
Prospectus Page 57
<PAGE>
G.T. GLOBAL THEME FUNDS
NOTES
- --------------------------------------------------------------------------------
Prospectus Page 58
<PAGE>
G.T. GLOBAL THEME FUNDS
NOTES
- --------------------------------------------------------------------------------
Prospectus Page 59
<PAGE>
G.T. GLOBAL THEME FUNDS
[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 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. INVESTMENT FUNDS, INC., G.T. GLOBAL
FINANCIAL SERVICES FUND, INC., GLOBAL FINANCIAL SERVICES PORTFOLIO, G.T.
GLOBAL INFRASTRUCTURE FUND, GLOBAL INFRASTRUCTURE PORTFOLIO, G.T. GLOBAL
NATURAL RESOURCES FUND, GLOBAL NATURAL RESOURCES PORTFOLIO, G.T. GLOBAL
CONSUMER PRODUCTS AND SERVICES FUND, GLOBAL CONSUMER PRODUCTS AND SERVICES
PORTFOLIO, G.T. GLOBAL HEALTH CARE FUND, G.T. GLOBAL TELECOMMUNICATIONS
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 IN SUCH JURISDICTION TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER.
THEPR503245MC
<PAGE>
[LOGO]
G.T. GLOBAL THEME FUNDS:
ADVISOR CLASS
SUPPLEMENT TO PROSPECTUS DATED
MARCH 1, 1995 AS REVISED JUNE 1, 1995
- --------------------------------------------------------------------------------
The following information supplements and should be read in conjunction with the
section of the Funds' Prospectus entitled "Financial Highlights":
The table below provides condensed financial information concerning income and
capital changes for one share of Class A and Class B shares of the G.T. Global
Consumer Products and Services Fund for the period shown. This information is
supplemented by the unaudited financial statements and accompanying notes
appearing 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 period presented below.
G.T. GLOBAL CONSUMER PRODUCTS AND SERVICES FUND
<TABLE>
<CAPTION>
CLASS A CLASS B
DECEMBER 30, 1994 DECEMBER 30, 1994
(COMMENCEMENT OF OPERATIONS) (COMMENCEMENT OF OPERATIONS)
TO APRIL 30, 1995 TO APRIL 30, 1995
(UNAUDITED)* (UNAUDITED)*
---------------------------- ----------------------------
<S> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period..................... $ 11.43 $ 11.43
------- -------
Income from investment operations:
Net investment income.................................. 0.10 0.08
Net realized and unrealized gain on investments........ 0.12 0.12
------- -------
Net increase in net asset value from investment
operations.............................................. 0.22 0.20
------- -------
Net asset value, end of period........................... $ 11.65 $ 11.63
------- -------
------- -------
Total investment return (c).............................. 1.92%(b) 1.75%(b)
Ratios and supplemental data:
Net assets, end of period (in 000's)..................... $ 1,615 $ 506
Ratio of net investment income to average net assets:
With reimbursement by G.T. Capital Management, Inc... 2.66%(a) 2.16%(a)
Without reimbursement by G.T. Capital Management,
Inc................................................. (33.87)%(a) (34.37)%(a)
Ratio of expenses to average net assets:
With reimbursement by G.T. Capital Management, Inc... 2.40%(a) 2.90%(a)
Without reimbursement by G.T. Capital Management,
Inc................................................. 38.93%(a) 39.43%(a)
<FN>
- ------------------
(a) Annualized.
(b) Not annualized.
(c) Total investment return does not include sales charges.
* These selected per share data were calculated based upon weighted average
shares outstanding during the period.
</TABLE>
June 30, 1995
THESX506021MC
<PAGE>
[LOGO] G.T. GLOBAL THEME FUNDS:
ADVISOR CLASS
PROSPECTUS -- MARCH 1, 1995, AS REVISED JUNE 1, 1995
- --------------------------------------------------------------------------------
G.T. GLOBAL FINANCIAL SERVICES FUND
("Financial Services Fund") seeks long-term capital growth by investing all of
its investable assets in the Global Financial Services Portfolio ("Financial
Services Portfolio"), that, in turn, invests primarily in securities of
companies throughout the world that operate within the financial services
industry.
G.T. GLOBAL INFRASTRUCTURE FUND ("Infrastructure Fund") seeks long-term capital
growth by investing all of its investable assets in the Global Infrastructure
Portfolio ("Infrastructure Portfolio"), that, in turn, invests primarily in
securities of companies throughout the world that design, develop or provide
products and services significant to a country's infrastructure.
G.T. GLOBAL NATURAL RESOURCES FUND ("Natural Resources Fund") seeks long-term
capital growth by investing all of its investable assets in the Global Natural
Resources Portfolio ("Natural Resources Portfolio"), that, in turn, invests
primarily in securities of companies throughout the world that own, explore, or
develop natural resources and other basic commodities, or supply goods and
services to such companies.
G.T. GLOBAL CONSUMER PRODUCTS AND SERVICES FUND ("Consumer Products and Services
Fund") seeks long-term capital growth by investing all of its investable assets
in the Global Consumer Products and Services Portfolio ("Consumer Products and
Services Portfolio"), that, in turn, invests primarily in securities of
companies throughout the world that manufacture, market, retail, or distribute
consumer products and services.
G.T. GLOBAL HEALTH CARE FUND ("Health Care Fund") seeks long-term capital
appreciation by investing in securities of health care companies throughout the
world.
G.T. GLOBAL TELECOMMUNICATIONS FUND ("Telecommunications Fund") seeks long-term
growth of capital by investing primarily in securities of companies throughout
the world engaged in development, manufacture or sale of telecommunication
services or equipment.
Collectively, the above Funds are known as the G.T. Global Theme Funds.
There can be no assurance that any G.T. Global Theme Fund or any Portfolio will
achieve its investment objective.
FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR ENDORSED OR GUARANTEED BY,
ANY BANK, NOR ARE THEY FEDERALLY INSURED OR OTHERWISE PROTECTED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER AGENCY.
The Financial Services Fund, Infrastructure Fund, Natural Resources Fund,
Telecommunications Fund and Consumer Products and Services Fund are mutual funds
each organized as a diversified series, and the Health Care Fund as a
non-diversified series, of G.T. Investment Funds, Inc. ("Company"). THE
FINANCIAL SERVICES FUND, INFRASTRUCTURE FUND, NATURAL RESOURCES FUND AND
CONSUMER PRODUCTS AND SERVICES FUND, UNLIKE MANY OTHER INVESTMENT COMPANIES
WHICH DIRECTLY ACQUIRE AND MANAGE THEIR OWN PORTFOLIOS OF SECURITIES, EACH SEEKS
ITS INVESTMENT OBJECTIVE BY INVESTING ALL OF ITS INVESTABLE ASSETS IN ITS
CORRESPONDING PORTFOLIO, AS DESCRIBED ABOVE. The Financial Services Portfolio,
Infrastructure Portfolio, Natural Resources Portfolio and Consumer Products and
Services Portfolio ("Portfolios") and the Health Care Fund and
Telecommunications Fund are open-end management investment companies each
managed by G.T. CAPITAL MANAGEMENT, INC., ("G.T. Capital"). Each of the
Portfolios' investment objective is identical to that of its corresponding Fund.
This structure is different from that of many other investment companies which
directly acquire and manage their own portfolios. Accordingly, investors should
carefully consider this investment approach. For additional information, see
"Investment Objective and Policies" and "Management."
G.T. Capital attempts to identify countries where economic, political and
regulatory factors are likely to produce above-average growth rates and income,
and to further identify companies within the industries in which each of the
G.T. Global Theme Funds invests in such countries that are best positioned to
benefit from these factors.
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.
PROSPECTIVE WISCONSIN INVESTORS SHOULD NOTE THAT THE INFRASTRUCTURE FUND,
NATURAL RESOURCES FUND AND CONSUMER PRODUCTS AND SERVICES FUND MAY EACH INVEST
UP TO 10% OF ITS TOTAL ASSETS IN RESTRICTED SECURITIES. THIS INVESTMENT ACTIVITY
MAY BE CONSIDERED SPECULATIVE AND MAY INVOLVE GREATER RISK AND MAY INCREASE SUCH
FUNDS' 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 information that an investor should know
before investing and should be read carefully and retained for future reference.
A Statement of Additional Information, dated March 1, 1995, as revised June 1,
1995, has been filed with the Securities and Exchange Commission ("SEC") and, as
amended or supplemented from time to time, is incorporated herein by reference.
The Statement of Additional Information is available without charge by writing
to the Funds at 50 California Street, 27th Floor, San Francisco, California
94111, or calling (800) 824-1580.
An investment in the G.T. Global Theme Funds offers the following advantages:
/ / 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.
- --------------------------------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED ON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
Prospectus Page 1
<PAGE>
G.T. GLOBAL THEME FUNDS
TABLE OF CONTENTS
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Page
---------
<S> <C>
Prospectus Summary........................................................................ 3
Financial Highlights...................................................................... 10
Investment Objective and Policies......................................................... 13
Risk Factors.............................................................................. 21
How to Invest............................................................................. 30
How to Make Exchanges..................................................................... 31
How to Redeem Shares...................................................................... 32
Shareholder Account Manual................................................................ 34
Calculation of Net Asset Value............................................................ 35
Dividends, Other Distributions and Federal Income Taxation................................ 35
Management................................................................................ 37
Other Information......................................................................... 43
</TABLE>
Prospectus Page 2
<PAGE>
G.T. GLOBAL THEME FUNDS
PROSPECTUS SUMMARY
- ------------------------------------------------------------
The following summary is qualified in its entirety by the more detailed
information appearing in the body of this Prospectus. Cross-references in this
summary are to headings in the body of the Prospectus.
<TABLE>
<S> <C> <C>
Investment Objective: The Financial Services Fund, Infrastructure Fund, Natural
Resources Fund and Consumer Products and Services Fund each seeks
long-term capital growth. The Health Care Fund seeks long-term
capital appreciation. The Telecommunications Fund seeks long-term
growth of capital
Principal Investments: Financial Services Fund invests all of its investable assets in
the Financial Services Portfolio, that, in turn, invests primarily
in the securities of companies throughout the world that operate
in the financial services industry
Infrastructure Fund invests all of its investable assets in the
Infrastructure Portfolio, that, in turn, invests primarily in the
securities of companies throughout the world that design, develop
or provide products and services significant to a country's
infrastructure
Natural Resources Fund invests all of its investable assets in the
Natural Resources Portfolio, that, in turn, invests primarily in
the securities of companies throughout the world that own, explore
or develop natural resources and other basic commodities, or
supply goods and services to such companies
Consumer Products and Services Fund invests all of its investable
assets in the Consumer Products and Services Portfolio, that, in
turn, invests primarily in the securities of companies throughout
the world that manufacture, market, retail or distribute consumer
products and services
Health Care Fund invests principally in the securities of health
care companies throughout the world
Telecommunications Fund invests principally in the securities of
companies throughout the world engaged in the development,
manufacture or sale of telecommunications services or equipment
Investment Manager: G.T. Capital is part of the G.T. Group, a leading international
investment advisory organization with over $20 billion under
management
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
</TABLE>
Prospectus Page 3
<PAGE>
G.T. GLOBAL THEME FUNDS
PROSPECTUS SUMMARY
(Continued)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Exchange Privileges: Advisor Class shares of a Fund may only be exchanged for Advisor
Class shares of other G.T. Global Mutual Funds
Dividends and Other
Distributions: 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 in Advisor Class shares of
other G.T. Global Mutual Funds
Net Asset Values: Advisor Class shares of the G.T. Global Theme Funds are expected
to be quoted daily in the financial section of most newspapers
</TABLE>
Prospectus Page 4
<PAGE>
G.T. GLOBAL THEME FUNDS
PROSPECTUS SUMMARY
(Continued)
- --------------------------------------------------------------------------------
THE G.T. GLOBAL THEME FUNDS. The Financial Services Fund, Infrastructure Fund,
Natural Resources Fund and Consumer Products and Services Fund each seeks
long-term capital growth, the Telecommunications Fund seeks long-term growth of
capital and the Health Care Fund seeks long-term capital appreciation. Each Fund
is hereinafter referred to individually as a "Fund" and collectively as "Funds."
In seeking this objective, each of the Financial Services Fund, Infrastructure
Fund, Natural Resources Fund and Consumer Products and Services Fund invests all
of its investable assets in the Financial Services Portfolio, Infrastructure
Portfolio, Natural Resources Portfolio and Consumer Products and Services
Portfolio, respectively, that, in turn, invests in securities in accordance with
an investment objective and policies identical to those of its corresponding
Fund. The Health Care Fund and Telecommunications Fund each seeks its investment
objective by investing primarily in securities of health care and
telecommunications companies, respectively, throughout the world. The Financial
Services Portfolio, Infrastructure Portfolio, Natural Resources Portfolio,
Consumer Products and Services Portfolio, Health Care Fund and
Telecommunications Fund are hereinafter referred to individually as a "Theme
Portfolio," or collectively, "Theme Portfolios." Each of the Theme Portfolios
concentrates in the industry corresponding to that Theme Portfolio's name, and
invests in companies engaged in activities related to its investment theme.
The Financial Services Fund, Infrastructure Fund, Natural Resources Fund,
Consumer Products and Services Fund and Telecommunications Fund are mutual funds
organized as diversified series, and the Health Care Fund as a non-diversified
series, of G.T. Investment Funds, Inc. (the "Company"). Advisor Class shares of
each Fund's common stock are available through Financial Advisors who have
entered into agreements with the Fund's distributor, G.T. Global Financial
Services, Inc. ("G.T. Global") and certain of its affiliates. 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 Management, Inc. ("G.T.
Capital") is the investment manager and administrator for the Portfolios, the
Health Care Fund and Telecommunications Fund, and is the administrator for the
Financial Services Fund, Infrastructure Fund, Natural Resources Fund and
Consumer Products and Services Fund. G.T. Capital provides investment management
and/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, Toronto, London, Tokyo, Hong Kong,
Singapore and Sydney. As of April 1, 1995, total assets under G.T. Group
management exceeded $20 billion. Of this amount, more than $17 billion was
invested in the securities of non-U.S. issuers. The companies comprising the
G.T. Group are indirect subsidiaries of the Prince of Liechtenstein Foundation.
See "Management."
INVESTMENT POLICIES. The Financial Services Fund seeks its objective by
investing all of its investable assets in the Financial Services Portfolio,
that, in turn, normally invests at least 65% of its total assets in common and
preferred stocks and warrants to acquire such securities issued by financial
services companies throughout the world. The remainder of the Financial Services
Portfolio's assets may be invested in debt securities issued by financial
services companies and/or in equity and debt securities of companies outside of
the financial services industry, which, in the opinion of G.T. Capital, stand to
benefit from developments in the financial services industry. See "Investment
Objective and Policies."
The Infrastructure Fund seeks its investment objective by investing all of its
investable assets in the Infrastructure Portfolio, that, in turn, normally
invests at least 65% of its total assets in common and preferred stocks and
warrants to acquire such securities issued by infrastructure companies
throughout the world. The remainder of the Infrastructure Portfolio's assets may
be invested in debt securities issued by infrastructure companies and/
Prospectus Page 5
<PAGE>
G.T. GLOBAL THEME FUNDS
PROSPECTUS SUMMARY
(Continued)
- --------------------------------------------------------------------------------
or equity and debt securities of companies outside of the infrastructure
industries which, in the opinion of G.T. Capital, stand to benefit from
developments in the infrastructure industries. See "Investment Objective and
Policies."
The Natural Resources Fund seeks its investment objective by investing all of
its investable assets in the Natural Resources Portfolio, that, in turn,
normally invests at least 65% of its total assets in common and preferred stock
and warrants to acquire such securities issued by companies throughout the world
which own, explore or develop natural resources and other basic commodities, or
supply goods and services to such companies. The remainder of the Portfolio's
assets may be invested in debt securities issued by such companies and/or equity
and debt securities of companies outside of the natural resource industries,
which, in the opinion of G.T. Capital, stand to benefit from developments in
natural resource industries. See "Investment Objective and Policies."
The Consumer Products and Services Fund seeks its investment objective by
investing all of its investable assets in the Consumer Products and Services
Portfolio, that, in turn, normally invests at least 65% of its total assets in
common and preferred stocks and warrants to acquire such securities issued by
consumer products and services companies throughout the world. The remainder of
the Consumer Products and Services Portfolio's assets may be invested in debt
securities issued by consumer products and services companies and/ or in equity
and debt securities of companies outside of the consumer products and services
industries, which, in the opinion of G.T. Capital, stand to benefit from
developments in the consumer products and services industries. See "Investment
Objective and Policies."
The Health Care Fund normally invests at least 65% of its total assets in common
and preferred stocks and warrants to acquire such securities issued by health
care companies throughout the world which, in the opinion of G.T. Capital, have
high potential for long-term capital growth. The remainder of the Health Care
Fund's assets may be invested in debt securities issued by health care companies
and/or equity and debt securities of companies outside of the health care
industry which, in the opinion of G.T. Capital, stand to benefit from
developments in the health care industry. The Fund may invest up to 35% of its
total assets in debt securities, including debt securities convertible into
equity, when doing so presents a favorable opportunity for potential capital
appreciation in the determination of G.T. Capital. See "Investment Objective and
Policies."
The Telecommunications Fund normally invests at least 65% of its total assets in
common and preferred stocks and warrants to acquire such securities issued by
telecommunications companies throughout the world. The remainder of the
Telecommunications Fund's assets may be invested in debt securities issued by
telecommunications companies and/or equity and debt securities of companies
outside of the telecommunications industry which, in G.T. Capital's judgment,
stand to benefit from developments in the telecommunications industry. See
"Investment Objective and Policies."
G.T. Capital believes that a portfolio of the securities of companies operating
in the sectors described above located throughout the world presents greater
potential for long-term capital growth than a portfolio comprised solely of the
securities of U.S. issuers.
INVESTMENT TECHNIQUES AND RISK FACTORS. Each Theme Portfolio may engage in
certain foreign currency, options and futures transactions to attempt to hedge
against the overall level of investment and currency risk associated with its
present or planned investments.
For temporary defensive purposes, each Theme Portfolio may hold U.S. or foreign
currency and/or invest any portion of its assets in debt securities or high
quality money market instruments of U.S. or foreign issuers. Each Theme
Portfolio also may hold cash and invest in high quality foreign or domestic
money market instruments pending investment of proceeds from new sales of Fund
shares, or to meet its ordinary daily cash needs. See "Investment Objective and
Policies" for a more complete discussion of the Theme Portfolios' investment
policies.
Prospectus Page 6
<PAGE>
G.T. GLOBAL THEME FUNDS
PROSPECTUS SUMMARY
(Continued)
- --------------------------------------------------------------------------------
Each Theme Portfolio may borrow an amount up to 33 1/3% of its total assets in
order to meet redemption requests. This may cause greater fluctuation in the
value of a Fund's shares than would be the case if the Theme Portfolios did not
borrow, but also may enable the Theme Portfolios to retain favorable securities
positions rather than liquidating such positions to meet redemption needs. The
Theme Portfolios also are authorized to lend securities if doing so represents a
favorable investment opportunity. See "Investment Objective and Policies --
Other Policies."
The Financial Services Portfolio, Health Care Fund and Telecommunications Fund
may each invest up to 5%, and the Infrastructure Portfolio, Natural Resources
Portfolio and Consumer Products and Services Portfolio may each invest up to
20%, of its total assets in debt securities rated below investment grade, which
may include (i) corporate debt securities and (ii) debt instruments issued by
governments whose debt is unrated. Investments of this type are subject to a
greater risk of loss of principal and interest. See "Investment Objective and
Policies -- Other Policies."
There is no assurance that the Funds or the Portfolios will achieve their
investment objective. Each Fund's net asset value will fluctuate, reflecting
fluctuations in the market value of its securities holdings. The Theme
Portfolios normally invest in a substantial number of issuers, and G.T. Capital
believes that each Theme Portfolio's policy of concentrating its investments in
its particular sector companies enables each Theme Portfolio to take advantage
of the potential for long-term growth presented by such companies. However, this
policy may cause the value of the Funds' shares to fluctuate more than if it
invested in a greater number of industries. The companies in each such industry
are subject to extensive government regulation; this and other factors could
affect the value of the Funds' shares. See "Risk Factors."
Investments in foreign securities involve risks relating to political and
economic developments abroad and the differences between the regulations to
which U.S. and foreign issuers are subject. Individual foreign economies also
may differ favorably or unfavorably from the U.S. economy. Changes in foreign
currency exchange rates will affect the Funds' 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. The Theme Portfolios' participation in
the currency, options and futures markets involves certain risks and transaction
costs. See "Risk Factors."
Investors should review the investment objective and policies of the Theme
Portfolios carefully and consider their ability to assume these and other risks
involved in purchasing shares of the particular Fund.
EXPENSES. The Financial Services Fund, Infrastructure Fund, Natural Resources
Fund and Consumer Products and Services Fund each pays administration fees
directly to G.T. Capital at an annualized rate of 0.25% of that Fund's average
daily net assets. In addition, each such Fund bears its pro rata portion of the
investment management and administration fees paid by its corresponding
Portfolio to G.T. Capital. The Financial Services Portfolio, Infrastructure
Portfolio, Natural Resources Portfolio and Consumer Products and Services
Portfolio each pays such fees, based on the average daily net assets of that
Portfolio, at the annualized rate of .725% on the first $500 million, .70% on
the next $500 million, .675% on the next $500 million, and .65% on all amounts
thereafter.
The Health Care Fund and Telecommunications Fund each pays G.T. Capital
investment management and administration fees, based on the average daily net
assets of that 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 all
amounts thereafter. G.T. Capital has undertaken to limit each Theme Portfolio'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 the
Funds' Advisory Class shares.
Prospectus Page 7
<PAGE>
G.T. GLOBAL THEME FUNDS
PROSPECTUS SUMMARY
(Continued)
- --------------------------------------------------------------------------------
SUMMARY OF INVESTOR COSTS. The expenses and maximum transaction costs associated
with investing in the Advisor Class shares of the Funds and the aggregate annual
operating expenses for the Funds and the Portfolios are reflected in the
following tables*:
<TABLE>
<CAPTION>
G.T. GLOBAL G.T. GLOBAL G.T. GLOBAL
HEALTH CARE TELECOMMUNICATIONS FINANCIAL SERVICES
FUND FUND FUND
--------------- --------------------- -------------------
ADVISOR CLASS ADVISOR CLASS ADVISOR CLASS
--------------- --------------------- -------------------
<S> <C> <C> <C>
SHAREHOLDER TRANSACTION COSTS:
Maximum sales charge on purchases of shares
(% of offering price)................................ None None None
Sales charges on reinvested distributions to
shareholders......................................... None None None
Deferred sales charges................................. None None None
Redemption charges..................................... None None None
Exchange fees:
-- On first four exchanges each year............... None None None
-- On each additional exchange..................... $7.50 $7.50 $7.50
ANNUAL FUND OPERATING EXPENSES:
(AS A % OF AVERAGE NET ASSETS)
Investment management and administration fees (after
reimbursement)....................................... 0.98% 0.93% 0.00%
12b-1 service and distribution expenses................ None None None
Other expenses......................................... 0.50% 0.37% 1.90%
------- ------- ------
Total Fund Operating Expenses (after reimbursement).... 1.48% 1.30% 1.90%
------- ------- ------
------- ------- ------
<CAPTION>
G.T. GLOBAL G.T. GLOBAL G.T. GLOBAL
INFRASTRUCTURE NATURAL RESOURCES CONSUMER PRODUCTS
FUND FUND AND SERVICES FUND
--------------- --------------------- -------------------
ADVISOR CLASS ADVISOR CLASS ADVISOR CLASS
--------------- --------------------- -------------------
<S> <C> <C> <C>
SHAREHOLDER TRANSACTION COSTS:
Maximum sales charge on purchases of shares
(% of offering price)................................ None None None
Sales charges on reinvested distributions to
shareholders......................................... None None None
Deferred sales charges................................. None None None
Redemption charges..................................... None None None
Exchange fees:
-- On first four exchanges each year............... None None None
-- On each additional exchange..................... $7.50 $7.50 $7.50
ANNUAL FUND OPERATING EXPENSES:
(AS A % OF AVERAGE NET ASSETS)
Investment management and administration fees (after
reimbursement)....................................... 0.04% 0.00% 0.98%
12b-1 service and distribution expenses................ None None None
Other expenses......................................... 1.86% 1.90% 0.80%
------- ------- ------
Total Fund Operating Expenses (after reimbursement).... 1.90% 1.90% 1.78%
------- ------- ------
------- ------- ------
</TABLE>
Prospectus Page 8
<PAGE>
G.T. GLOBAL THEME FUNDS
PROSPECTUS SUMMARY
(Continued)
- --------------------------------------------------------------------------------
HYPOTHETICAL EXAMPLE OF EFFECT OF EXPENSES:
An investor would have directly or indirectly paid the following expenses at the
end of the periods shown on a $1,000 investment in the Funds, assuming a 5%
annual return*:
<TABLE>
<CAPTION>
G.T. GLOBAL G.T. GLOBAL G.T. GLOBAL
HEALTH CARE TELECOMMUNICATIONS FINANCIAL SERVICES
FUND FUND FUND
---------------------------- ---------------------------- ----------------------------
ONE THREE FIVE TEN ONE THREE FIVE TEN ONE THREE FIVE TEN
YEAR YEARS YEARS YEARS YEAR YEARS YEARS YEARS YEAR YEARS YEARS YEARS
---- ----- ----- ----- ---- ----- ----- ----- ---- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Advisor Class Shares............... $15 $ 46 N/A N/A $13 $ 40 N/A N/A $19 $ 59 N/A N/A
</TABLE>
<TABLE>
<CAPTION>
G.T. GLOBAL
G.T. GLOBAL G.T. GLOBAL CONSUMER PRODUCTS
INFRASTRUCTURE NATURAL RESOURCES AND
FUND FUND SERVICES FUND
---------------------------- ---------------------------- ----------------------------
ONE THREE FIVE TEN ONE THREE FIVE TEN ONE THREE FIVE TEN
YEAR YEARS YEARS YEARS YEAR YEARS YEARS YEARS YEAR YEARS YEARS YEARS
---- ----- ----- ----- ---- ----- ----- ----- ---- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Advisor Class Shares............... $19 $ 59 N/A N/A $19 $ 59 N/A N/A $18 $ 55 N/A N/A
<FN>
- ------------------
* BECAUSE ADVISOR CLASS SHARES HAVE NOT BEEN PREVIOUSLY 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 HEALTH CARE FUND
AND TELECOMMUNICATIONS FUND BASED ON THE FUNDS' FISCAL YEAR ENDED OCTOBER
31, 1994, FOR THE FINANCIAL SERVICES FUND, INFRASTRUCTURE FUND AND NATURAL
RESOURCES FUND AND THEIR CORRESPONDING PORTFOLIOS BASED ON THE FISCAL
PERIOD MAY 31, 1994 (COMMENCEMENT OF OPERATIONS) TO OCTOBER 31, 1994, AND
FOR THE CONSUMER PRODUCTS AND SERVICES FUND AND ITS CORRESPONDING PORTFOLIO
(WHICH COMMENCED OPERATIONS DECEMBER 30, 1994) ON ESTIMATED AMOUNTS FOR THE
FIRST YEAR OF OPERATIONS OF SUCH FUND AND ITS PORTFOLIO. THESE TABLES ARE
INTENDED TO ASSIST INVESTORS IN UNDERSTANDING THE VARIOUS COSTS AND
EXPENSES ASSOCIATED WITH INVESTING IN THE FUNDS. "Other expenses" include
custody, transfer agent, legal, audit and other operating 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
Portfolio or Fund's portfolio transactions pay all or a portion of the
Portfolio or Fund's custodian fees 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 Health Care Fund,
Telecommunications Fund or the Portfolios. Without such reductions, "Other
expenses" for Advisor Class shares of the Health Care Fund,
Telecommunications Fund, Financial Services Fund and their corresponding
Portfolios, Infrastructure Fund and its corresponding Portfolio, Natural
Resources Fund and its corresponding Portfolio are estimated to be 0.52%,
0.41%, 1.94%, 1.86% and 1.92%, respectively. See "Management" herein and in
the Statement of Additional Information for more information. Without
reimbursements, "Investment management and administration fees," "Other
expenses" and "Total Fund Operating Expenses" for Advisor Class shares
would have been .98%, 8.84%, and 9.82% for Financial Services Fund and its
corresponding Portfolio, .98%, 1.80%, and 2.78% for Infrastructure Fund and
its corresponding Portfolio, .98%, 2.90%, and 3.88% for Natural Resources
Fund and its corresponding Portfolio and .98%, 8.67% and 9.65% for Consumer
Products and Services Fund and its corresponding Portfolio. Investors
purchasing Advisor Class shares through financial planners, trust
companies, bank trust departments or registered investment advisers, or
under a "wrap fee" program, will be subject to additional fees charged by
such entities or by the sponsors of such programs. Where any account
advised by one of the companies comprising or affiliated with the G.T.
Group invests in Advisor Class shares of a 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 FUNDS' AND
THE PORTFOLIOS' 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 Funds' or the Portfolios'
projected or actual performance.
The Annual Fund Operating Expenses for the Consumer Products and Services
Fund and its corresponding Portfolio are annualized projections based upon
current administration fees for the Fund and management and administration
fees for the Portfolio and estimated amounts for Other expenses. The Board
of Directors of the Company believes that the aggregate per share expenses
of the Financial Services Fund, Infrastructure Fund, Natural Resources Fund
and Consumer Products and Services Fund and each of their corresponding
Portfolios will be approximately equal to the expenses such Fund would
incur if its assets were invested directly in the type of securities being
held by its corresponding Portfolio. If investors other than such Fund
invest in its corresponding Portfolio, such Funds could achieve economies
of scale which could reduce expenses.
</TABLE>
Prospectus Page 9
<PAGE>
G.T. GLOBAL THEME FUNDS
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
The tables below provide condensed financial information concerning income and
capital changes for one share of each class of shares of the 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 is also 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 HEALTH CARE FUND
<TABLE>
<CAPTION>
CLASS B++ CLASS A+
------------------------- ---------------------------------------------------------------
AUGUST 7,
1989
(COMMENCEMENT
APRIL 1, OF
YEAR ENDED 1993 YEAR ENDED OCTOBER 31, OPERATIONS)
OCTOBER 31, TO OCTOBER ------------------------------------------------ TO OCTOBER
1994* 31, 1993* 1994* 1993* 1992 1991 1990 31, 1989
----------- ----------- -------- -------- -------- -------- -------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of
period............................... $ 17.80 $ 15.59 $ 17.86 $ 17.44 $ 19.29 $ 12.83 $ 11.83 $ 11.43
----------- ----------- -------- -------- -------- -------- -------- -------------
Income from investment operations:
Net investment income (loss)........ (0.32) (0.14) (0.22) (0.15) (0.18) 0.03 0.06 0.01
Net realized and unrealized gain
(loss) on investments.............. 2.02 2.35 2.02 0.57 (1.53) 6.78 0.97 0.39
----------- ----------- -------- -------- -------- -------- -------- -------------
Net increase (decrease) from
investment operations.............. 1.70 2.21 1.80 0.42 (1.71) 6.81 1.03 0.40
----------- ----------- -------- -------- -------- -------- -------- -------------
Distributions:
Net investment income............... (0.00) (0.00) (0.00) (0.00) (0.00) (0.07) (0.03) (0.00)
Net realized gain on investments.... (0.00) (0.00) (0.00) (0.00) (0.14) (0.28) (0.00) (0.00)
In excess of net realized gain on
investments........................ (0.04) (0.00) (0.06) (0.00) (0.00) (0.00) (0.00) (0.00)
----------- ----------- -------- -------- -------- -------- -------- -------------
Total distributions............... (0.04) (0.00) (0.06) (0.00) (0.14) (0.35) (0.03) (0.00)
----------- ----------- -------- -------- -------- -------- -------- -------------
Net asset value, end of period........ $ 19.46 $ 17.80 $ 19.60 $ 17.86 $ 17.44 $ 19.29 $ 12.83 $ 11.83
----------- ----------- -------- -------- -------- -------- -------- -------------
----------- ----------- -------- -------- -------- -------- -------- -------------
Total investment return (c)........... 9.55% 14.2%(a) 10.11% 2.4% (8.9)% 54.2% 8.7% 3.5%(a)
Ratios and supplemental data:
Net assets, end of period (in
000's)............................... $39,100 $ 8,604 $438,940 $461,113 $655,867 $552,897 $145,544 $49,903
Ratio of net investment income (loss)
to average net assets................ (1.73)% (1.4)%(b) (1.23)% (0.9)% (1.0)% 0.2% 0.7% 3.2%(b)
Ratio of expenses to average net
assets before expense reductions..... 2.50% 2.00%
Ratio of expenses to average net
assets............................... 2.48% 2.5%(b) 1.98% 2.0% 2.1% 2.0% 2.4% 2.5%(b)
Portfolio turnover rate +++........... 64% 61% 64% 61% 30% 23% 34% 183%(b)
<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.
* These selected per share data were calculated based upon weighted average
shares outstanding during the period.
(a) Not annualized.
(b) Annualized.
(c) Total investment return does not include sales charges.
</TABLE>
Prospectus Page 10
<PAGE>
G.T. GLOBAL THEME FUNDS
G.T. GLOBAL TELECOMMUNICATIONS FUND
<TABLE>
<CAPTION>
CLASS A+
----------------------------------------
CLASS B++
----------------------------------------
YEAR ENDED APRIL 1, 1993 TO YEAR ENDED YEAR ENDED
OCTOBER 31, 1994 (C) OCTOBER 31, 1993 OCTOBER 31, 1994 (C) OCTOBER 31, 1993
--------------------- ----------------- --------------------- -----------------
<S> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period... $ 16.87 $ 12.68 $ 16.92 $ 11.16
----------- ----------------- ----------- -----------------
Income from investment operations:
Net investment income (loss)......... (0.10) 0.01 (0.01) 0.08
Net realized and unrealized gain
(loss) on investments............... 1.17 4.18 1.17 5.83
----------- ----------------- ----------- -----------------
Net increase (decrease) from
investment operations............... 1.07 4.19 1.16 5.91
----------- ----------------- ----------- -----------------
Distributions:
Net investment income................ (0.01) (0.00) (0.01) (0.15)
Net realized gain on investments..... (0.27) (0.00) (0.27) (0.00)
----------- ----------------- ----------- -----------------
Total distributions................ (0.28) (0.00) (0.28) (0.15)
----------- ----------------- ----------- -----------------
Net asset value, end of period......... $ 17.66 $ 16.87 $ 17.80 $ 16.92
----------- ----------------- ----------- -----------------
----------- ----------------- ----------- -----------------
Total investment return (d)............ 6.50% 33.0%(a) 7.02% 53.6%
Ratios and supplemental data:
Net assets, end of period (in 000's)... $ 1,184,081 $ 455,335 $ 1,644,402 $ 1,223,340
Ratio of net investment income to
average net assets.................... (0.52)% 0.3%(b) (0.02)% 0.8%
Ratio of expenses to average net assets
before expense reductions............. 2.34% 1.84%
Ratio of expenses to average net
assets................................ 2.30% 2.5%(b) 1.80% 2.0%
Portfolio turnover rate+++............. 57% 41% 57% 41%
<CAPTION>
JANUARY 27, 1992
(COMMENCEMENT
OF OPERATIONS) TO
OCTOBER 31, 1992
-----------------
<S> <C>
Per Share Operating Performance:
Net asset value, beginning of period... $ 11.43
-----------------
Income from investment operations:
Net investment income (loss)......... 0.14*
Net realized and unrealized gain
(loss) on investments............... (0.41)
-----------------
Net increase (decrease) from
investment operations............... (0.27)
-----------------
Distributions:
Net investment income................ (0.00)
Net realized gain on investments..... (0.00)
-----------------
Total distributions................ (0.00)
-----------------
Net asset value, end of period......... $ 11.16
-----------------
-----------------
Total investment return (d)............ (2.4)%(a)
Ratios and supplemental data:
Net assets, end of period (in 000's)... $442,862
Ratio of net investment income to
average net assets.................... 2.1%*(b)
Ratio of expenses to average net assets
before expense reductions.............
Ratio of expenses to average net
assets................................ 2.3%*(b)
Portfolio turnover rate+++............. 4%(b)
<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 less than $0.01. Without such reimbursement, the annualized
expense ratio would have been 2.30% and the annualized ratio of net
investment income to average net assets would have been 2.04%.
(a) Not annualized.
(b) Annualized.
(c) These selected per share data were calculated based upon weighted average
shares outstanding during the period.
(d) Total investment return does not include sales charges.
</TABLE>
Prospectus Page 11
<PAGE>
G.T. GLOBAL THEME FUNDS
<TABLE>
<CAPTION>
G.T. GLOBAL G.T. GLOBAL
FINANCIAL SERVICES INFRASTRUCTURE
FUND FUND
----------------------------------- -----------------------------------
CLASS B CLASS A CLASS B CLASS A
---------------- ---------------- ---------------- ----------------
MAY 31, 1994 MAY 31, 1994 MAY 31, 1994 MAY 31, 1994
(COMMENCEMENT OF (COMMENCEMENT OF (COMMENCEMENT OF (COMMENCEMENT OF
OPERATIONS) TO OPERATIONS) TO OPERATIONS) TO OPERATIONS) TO
OCTOBER 31, 1994 OCTOBER 31, 1994 OCTOBER 31, 1994 OCTOBER 31, 1994
---------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period........ $ 11.43 $ 11.43 $ 11.43 $ 11.43
---------------- ---------------- ---------------- ----------------
Income from investment operations:
Net investment income+.................... 0.00 0.02 (0.01) 0.01
Net realized and unrealized gain (loss) on
investments.............................. 0.17*** 0.17*** 1.03 1.03
---------------- ---------------- ---------------- ----------------
Net increase (decrease) from investment
operations................................. 0.17 0.19 1.02 1.04
---------------- ---------------- ---------------- ----------------
Net asset value, end of period.............. $ 11.60 $ 11.62 $ 12.45 $ 12.47
---------------- ---------------- ---------------- ----------------
---------------- ---------------- ---------------- ----------------
Total investment return (c)................. 1.49%(b) 1.66%(b) 8.92%(b) 9.10%(b)
Ratios and supplemental data:
Net assets, end of period
(in 000's)................................. $ 2,235 $ 3,175 $ 30,954 $ 23,615
Ratio of net investment income to average
net assets................................. 0.16%**(a) 0.66%*(a) (0.09)%**(a) 0.41%*(a)
Ratio of expenses to average net assets
before expense reductions.................. 2.90% 2.40% 2.90% 2.40%
Ratio of expenses to average net assets..... 2.90%**(a) 2.40%*(a) 2.90%**(a) 2.40%*(a)
<CAPTION>
G.T. GLOBAL
NATURAL RESOURCES
FUND
-----------------------------------
CLASS B CLASS A
---------------- ----------------
MAY 31, 1994 MAY 31, 1994
(COMMENCEMENT OF (COMMENCEMENT OF
OPERATIONS) TO OPERATIONS) TO
OCTOBER 31, 1994 OCTOBER 31, 1994
---------------- ----------------
<S> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period........ $ 11.43 $ 11.43
---------------- ----------------
Income from investment operations:
Net investment income+.................... 0.03 0.06
Net realized and unrealized gain (loss) on
investments.............................. 0.92 0.92
---------------- ----------------
Net increase (decrease) from investment
operations................................. 0.95 0.98
---------------- ----------------
Net asset value, end of period.............. $ 12.38 $ 12.41
---------------- ----------------
---------------- ----------------
Total investment return (c)................. 8.31%(b) 8.57%(b)
Ratios and supplemental data:
Net assets, end of period
(in 000's)................................. $ 13,404 $ 14,797
Ratio of net investment income to average
net assets................................. 2.13%**(a) 2.63%*(a)
Ratio of expenses to average net assets
before expense reductions.................. 2.90% 2.40%
Ratio of expenses to average net assets..... 2.90%**(a) 2.40%*(a)
<FN>
- ------------------
* The annualized ratios of operating expenses and net investment income to
average net assets for Class A shares of Financial Services Fund,
Infrastructure Fund and Natural Resources Fund before reimbursement by G.T.
Capital Management, Inc. for the period ended October 31, 1994 would have
been 10.32% and (7.26)%; 3.28% and (0.47)%; and 4.38% and 0.65%,
respectively.
** The annualized ratios of operating expenses and net investment income to
average net assets for Class B shares of Financial Services Fund,
Infrastructure Fund and Natural Resources Fund before reimbursement by G.T.
Capital Management, Inc. for the period ended October 31, 1994 would have
been 10.82% and (7.76)%; 3.78% and (0.97)%; and 4.88% and 0.15%,
respectively.
*** The per share amount does not correspond with the net realized and
unrealized gain for the period due to the timing of the sales of Fund
shares and the amount of per share realized and unrealized gains and losses
at such time.
+ The net investment income per share before reimbursement by G.T. Capital
Management, Inc. for both classes of shares of Financial Services Fund,
Infrastructure Fund and Natural Resources Fund would have been reduced by
$0.23, $0.02 and $0.04, respectively.
(a) Annualized.
(b) Not annualized.
(c) Total investment return does not include sales charges.
</TABLE>
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<PAGE>
G.T. GLOBAL THEME FUNDS
INVESTMENT OBJECTIVE
AND POLICIES
- --------------------------------------------------------------------------------
FINANCIAL SERVICES FUND
The Financial Services Fund's investment objective is long-term capital growth.
The Financial Services Fund seeks its objective by investing all of its
investable assets in the Financial Services Portfolio, that, in turn invests
primarily in equity securities of companies throughout the world that operate in
the financial services industry. The Financial Services Portfolio's investment
objective is identical to that of the Financial Services Fund. The Financial
Services Portfolio invests in financial services companies which, in the opinion
of G.T. Capital, have potential for above average, long-term growth in sales and
earnings on a sustained basis. There is no assurance that the Financial Services
Fund or the Financial Services Portfolio will achieve its investment objective.
At least 65% of the Financial Services Portfolio's total assets normally will be
invested in common and preferred stocks and warrants to acquire such securities,
issued by companies in the financial services industry. A "financial services"
company is an entity in which (i) at least 50% of either the revenues or
earnings was derived from financial services activities, or (ii) at least 50% of
the assets was devoted to such activities, based on the company's most recent
fiscal year. The remainder of the Financial Services Portfolio's assets may be
invested in debt securities issued by financial services companies and/or equity
and debt securities of companies outside of the financial services industry,
which, in the opinion of G.T. Capital, stand to benefit from developments in the
financial services industry.
In analyzing companies for investment by the Financial Services Portfolio, G.T.
Capital ordinarily looks for several of the following characteristics: above-
average per share earnings growth; high return on invested capital; a healthy
balance sheet; sound financial and accounting policies and overall financial
strength; strong competitive advantages; efficient service; pricing flexibility;
strong management; and general operating characteristics which will enable the
companies to compete successfully in their respective markets.
GLOBAL FINANCIAL SERVICES INDUSTRY INVESTMENT. Examples of financial services
companies include those providing financial services to consumers and industry
including the following and their foreign equivalents: commercial banks and
savings institutions and loan associations and their holding companies; consumer
and industrial finance companies; diversified financial services companies;
investment banking; insurance brokerages; securities brokerage and investment
advisory companies; real estate-related companies; leasing companies; and a
variety of firms in all segments of the insurance field such as multi-line,
property and casualty and life insurance and insurance holding companies.
G.T. Capital believes an accelerating rate of global economic interdependence
will lead to significant growth in the demand for financial services. In
addition, in G.T. Capital's view, as the industry evolves, opportunities will
emerge for those companies positioned for the future. Thus, G.T. Capital expects
that banking and related financial institution consolidation in the developed
countries, increased demand for retail borrowing in developing countries, a
growing need for international trade-based financing, a rising demand for
sophisticated risk management, the proliferating number of liquid securities
markets around the world, and larger concentrations of investable assets should
lead to growth in financial service companies that are positioned for the
future.
INFRASTRUCTURE FUND
The Infrastructure Fund's investment objective is long-term capital growth. The
Infrastructure Fund seeks its objective by investing all of its investable
assets in the Infrastructure Portfolio, that, in turn, invests primarily in
equity securities of companies throughout the world that design, develop or
provide products and services significant to a country's infrastructure. The
Infrastructure Portfolio's investment objective is identical to that of the
Infrastructure Fund. The Infrastructure Portfolio invests in infrastructure
companies which, in the opinion of G.T. Capital, have potential for above
average, long-term growth in sales and earnings on a sustained basis. There is
no assurance that the Infrastructure Fund or the Infrastructure Portfolio will
achieve its investment objective.
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<PAGE>
G.T. GLOBAL THEME FUNDS
At least 65% of the Infrastructure Portfolio's total assets normally will be
invested in common stocks and preferred stocks and warrants to acquire such
securities issued by infrastructure companies. An "infrastructure" company is an
entity in which (i) at least 50% of either the revenues or earnings was derived
from infrastructure activities, or (ii) at least 50% of the assets was devoted
to such activities, based on the company's most recent fiscal year. The
remainder of the Infrastructure Portfolio's assets may be invested in debt
securities issued by infrastructure companies and/or equity and debt securities
of companies outside of the infrastructure industries, which, in the opinion of
G.T. Capital, stand to benefit from developments in the infrastructure
industries.
In analyzing companies for investment by the Infrastructure Portfolio, G.T.
Capital ordinarily looks for several of the following characteristics: above-
average per share earnings growth; high return on invested capital; a healthy
balance sheet; sound financial and accounting policies and overall financial
strength; strong competitive advantages; effective research and product
development and marketing; development of new technologies; efficient service;
pricing flexibility; strong management; and general operating characteristics
that will enable the companies to compete successfully in their respective
markets.
GLOBAL INFRASTRUCTURE INDUSTRIES INVESTMENT. For purposes of the Infrastructure
Portfolio's policy of investing at least 65% of its total assets in the
securities of infrastructure companies, the companies in which the
Infrastructure Portfolio will principally invest will be those engaged in
designing, developing or providing the following products and services:
electricity production; oil, gas, and coal exploration, development, production
and distribution; water supply, including water treatment facilities; nuclear
power and other alternative energy sources; transportation, including the
construction or operation of transportation systems; steel, concrete, or similar
types of products; communications equipment and services (including equipment
and services for both data and voice transmission); mobile communications and
cellular radio/paging; emerging technologies combining telephone, television
and/or computer systems; and other products and services, which, in G.T.
Capital's judgment, constitute services significant to the development of a
country's infrastructure.
In addition, long-term growth rates of certain foreign countries' economies may
be substantially higher than those of the U.S. economy. An integral aspect of
the foreign countries' economies may be the development or improvement of their
infrastructure.
G.T. Capital believes that a country's infrastructure is one key to the
long-term success of that country's economy. G.T. Capital believes that adequate
energy, transportation, water, and communications systems are essential elements
for long-term economic growth. G.T. Capital believes that many developing
nations, especially in Asia and Latin America, plan to make significant
expenditures to the development of their infrastructure in the coming years,
which is expected to facilitate increased levels of services and manufactured
goods.
In the developed countries of North America, Europe, Japan and the south
Pacific, G.T. Capital expects that the replacement and upgrade of transportation
and communications systems should stimulate growth in the industries of those
countries. In G.T. Capital's view, deregulation of telecommunications and
electric and gas utilities in many countries is promoting significant changes in
these industries.
G.T. Capital believes that strong economic growth in developing countries and
infrastructure replacement, upgrade, and deregulation in more developed
countries provide an environment for favorable investment opportunities in
infrastructure companies worldwide.
NATURAL RESOURCES FUND
The Natural Resources Fund's investment objective is long-term capital growth.
The Natural Resources Fund seeks its objective by investing all of its
investable assets in the Natural Resources Portfolio, that, in turn, invests
primarily in equity securities of companies throughout the world that own,
explore or develop natural resources and other basic commodities, or supply
goods and services to such companies. The Natural Resources Portfolio's
investment objective is identical to that of the Natural Resources Fund. The
Natural Resources Portfolio expects to principally invest in those natural
resource companies that own, explore or develop energy sources; ferrous and
non-ferrous metals, strategic metals and precious metals, chemicals, forest
products, foodstuffs, refined products, such as steel and other basic
commodities, which, in G.T. Capital's opinion, historically have been produced
and marketed profitably during periods of improving supply and demand
fundamentals and rising inflation. The Natural Resources Portfolio invests in
natural resource companies which, in the
Prospectus Page 14
<PAGE>
G.T. GLOBAL THEME FUNDS
opinion of G.T. Capital, have potential for above average, long-term growth in
sales and earnings. There is no assurance that the Natural Resources Fund or the
Natural Resources Portfolio will achieve its investment objective.
At least 65% of the Natural Resources Portfolio's total assets will normally be
invested in common stock and preferred stock, and warrants to acquire such
securities, issued by natural resource companies. A "natural resource" company
is an entity in which (i) at least 50% of either the revenues or earnings was
derived from natural resource activities, or (ii) at least 50% of the assets was
devoted to such activities, based upon the company's most recent fiscal year.
The remainder of the Natural Resources Portfolio's assets may be invested in
debt securities issued by natural resource companies and/or equity and debt
securities of companies outside of the natural resource industries, which, in
the opinion of G.T. Capital, stand to benefit from developments in the natural
resource industries.
The Natural Resources Portfolio may invest in securities of companies in those
natural resource industries and commodity groups which, in G.T. Capital's
opinion, may perform well during periods of rising inflation. In analyzing such
companies for possible investment by the Natural Resources Portfolio, G.T.
Capital ordinarily looks for several of the following characteristics:
above-average per share earnings growth; high return on invested capital; a
healthy balance sheet; sound financial and accounting policies and overall
financial strength; strong competitive advantages; development of new
technologies; efficient service; strong management; and general operating
characteristics that will enable the companies to compete successfully in their
respective markets.
GLOBAL NATURAL RESOURCE INDUSTRIES INVESTMENT. The natural resource industries
are comprised of a variety of companies. For purposes of the Natural Resources
Portfolio's policy of investing at least 65% of its total assets in the
securities of natural resource companies, the companies in which the Natural
Resources Portfolio will principally invest will be those which own, explore or
develop: energy sources (such as oil, gas and coal); ferrous and non-ferrous
metals (such as iron, aluminum, copper, nickel, zinc and lead), strategic metals
(such as uranium and titanium) and precious metals (such as gold, silver and
platinum); chemicals; forest products (such as timber, coated and uncoated tree
sheet, pulp and newsprint); other basic commodities (such as foodstuffs);
refined products (such as chemicals and steel) and service companies that sell
to these producers and refiners; and other products and services, which, in G.T.
Capital's opinion are significant to the ownership and development of natural
resources and other basic commodities.
G.T. Capital will allocate the Natural Resources Portfolio's investments among
those natural resource companies depending on its assessment of their long-term
growth potential. In assessing these companies' long-term growth potential, G.T.
Capital will evaluate, among other factors, their capabilities for expanded
exploration and production, superior exploration programs and production
techniques and facilities, current inventories, expected production and demand
levels and the potential to accumulate new resources.
G.T. Capital believes that the liberalization of formerly socialist economies
will bring about dramatic changes in both the supply and demand for natural
resources. In addition, rapid industrialization in developing countries of Asia
and Latin America are generating new demands for industrial materials that are
affecting world commodities markets. G.T. Capital believes these changes are
likely to create investment opportunities that benefit from new sources of
supply and/or from changes in commodities prices.
G.T. Capital believes that investments in natural resource industries offer an
opportunity to protect wealth against the capital-eroding effects of inflation.
During periods of accelerating inflation or currency uncertainty, worldwide
investment demand for natural resources, particularly precious metals, tends to
increase, and during periods of disinflation or currency stability, it tends to
decrease. G.T. Capital believes that rising commodity prices and increasing
worldwide industrial production may favorably affect share prices of natural
resource companies, and investments in such companies can offer excellent
opportunities to offset the effects of inflation.
CONSUMER PRODUCTS AND SERVICES FUND
The Consumer Products and Services Fund's investment objective is long-term
capital growth. The Consumer Products and Services Fund seeks its objective by
investing all of its investable assets in the Consumer Products and Services
Portfolio, that, in turn, invests primarily in equity securities of companies
throughout the world that manufacture, market, retail or distribute consumer
products and services. The Consumer Products and Services Portfolio's investment
objective is identical
Prospectus Page 15
<PAGE>
G.T. GLOBAL THEME FUNDS
to that of the Consumer Products and Services Fund. The Consumer Products and
Services Portfolio invests in consumer products and services companies which, in
the opinion of G.T. Capital, have potential for above average, long-term growth
in sales and earnings on a sustained basis. There is no assurance that the
Consumer Products and Services Fund or the Consumer Products and Services
Portfolio will achieve its investment objective.
At least 65% of the Fund's total assets normally will be invested in common
stocks and preferred stocks and warrants to acquire such securities issued by
companies in the consumer products and services industries. A "consumer products
or services" company is an entity in which (i) at least 50% of either the
revenues or earnings was derived from activities relating to consumer products
or services or (ii) at least 50% of the assets was devoted to such activities,
based on the company's most recent fiscal year. The remainder of the Consumer
Products and Services Portfolio's assets may be invested in debt securities
issued by consumer products or services companies and/or equity and debt
securities of companies outside the consumer products or services industries,
which, in the opinion of G.T. Capital, stand to benefit from developments in
such industries.
In analyzing companies for investment by the Consumer Products and Services
Portfolio, G.T. Capital ordinarily looks for several of the following
characteristics: above-average per share earnings growth; high return on
invested capital; a healthy balance sheet; sound financial and accounting
policies and overall financial strength; strong management; strong and growing
market share; pricing flexibility; effective product development and marketing;
excellent products and services; superior perceived value; and general operating
characteristics which will enable the companies to compete successfully in their
respective markets.
CONSUMER PRODUCTS AND SERVICES INDUSTRIES INVESTMENT. The consumer products and
services industries are composed of a variety of companies. For the purposes of
the Consumer Products and Services Portfolio's policy of investing at least 65%
of its total assets in the securities of consumer products and services
companies, the companies in which the Consumer Products and Services Portfolio
will principally invest will be those that manufacture, market, retail, or
distribute: (i) durable goods, such as homes, household goods, automobiles,
boats, furniture and appliances, and computers; (ii) non-durable goods, such as
food and beverages and apparel; (iii) media, entertainment, broadcasting,
publishing and sports-related goods and services, such as television and radio
broadcast, motion pictures, wireless communications, gaming casinos, theme
parks, restaurants and lodging; and (iv) goods and services to companies in the
foregoing industries such as advertisers, textile companies and distribution and
shipping companies.
The Consumer Products and Services Portfolio expects that a significant portion
of its assets may be invested in the securities of U.S. issuers from time to
time, particularly those that market their products globally. However, consumer
products and services companies of a particular nation or region of the world
are often operated and owned in their local markets, close to their customers.
These companies, G.T. Capital believes, often offer superior opportunities for
capital growth as compared to their larger, multinational counterparts. Certain
global markets may be more attractive than others from time to time; companies
dependent on U.S. markets, for example, may be outperformed by companies not
dependent on U.S. markets.
G.T. Capital also believes that the demand for consumer products and services
worldwide will increase along with rising disposable incomes in both developed
and developing nations. Emerging economies, such as those in China, Southeast
Asia, the former Eastern Europe and Latin America, offer opportunities for the
growth and expansion of consumer markets. These regions currently comprise a
growing source of inexpensive manufacture of consumer products for export and a
growing source of demand for consumer products and services as the disposable
incomes of their populations increase. In G.T. Capital's view, these changes are
likely to create investment opportunities in companies, both local and
multi-national, that are able to employ innovative manufacturing, marketing,
retailing and distribution methods to open new markets and/or expand existing
markets.
HEALTH CARE FUND
The Health Care Fund's investment objective is long-term capital appreciation.
The Health Care Fund seeks its objective by investing primarily in equity
securities of health care companies throughout the world. The Health Care Fund
invests in health care companies, which, in the opinion of G.T. Capital, have
potential for above average, long-term growth in sales and earnings on a
Prospectus Page 16
<PAGE>
G.T. GLOBAL THEME FUNDS
sustained basis. There is no assurance that the Health Care Fund will achieve
its objective.
At least 65% of the Health Care Fund's total assets normally will be invested in
common and preferred stocks, and warrants to acquire such securities, issued by
health care companies. A "health care" company is an entity in which (i) at
least 50% of its revenues were derived from health care activities, or (ii) at
least 50% of its assets were devoted to such activities, based on the company's
most recent fiscal year. The remainder of the Health Care Fund's assets may be
invested in debt securities issued by health care companies and/or equity and
debt securities of companies outside of the health care industry, which, in the
opinion of G.T. Capital, stand to benefit from developments in the health care
industry. The Health Care Fund also may invest up to 35% of its total assets in
debt securities, including debt securities convertible into equity, when G.T.
Capital believes such debt securities present a favorable opportunity for
capital appreciation.
In analyzing companies for investment by the Health Care Fund, G.T. Capital
ordinarily looks for several of the following characteristics: above-average per
share earnings growth; high return on invested capital; a healthy balance sheet;
sound financial and accounting policies and overall financial strength; strong
competitive advantages; effective research and product development and
marketing; efficient service; pricing flexibility; strong management; and
general operating characteristics which will enable the companies to compete
successfully in their respective markets.
GLOBAL HEALTH CARE INDUSTRY INVESTMENT. The health care industry includes
companies that are substantially engaged in the design, manufacture or sale of
products or services used for or in connection with health care or medicine.
Such firms may include pharmaceutical companies; firms that design, manufacture,
sell or supply medical, dental and optical products, hardware or services;
companies involved in biotechnology, medical diagnostic, and biochemical
research and development; and companies involved in the ownership and/or
operation of health care facilities.
The Health Care Fund expects that, from time to time, a significant portion of
its assets may be invested in the securities of U.S. issuers. Health care,
however, is a global industry with significant, growing markets outside of the
United States. A sizeable portion of the companies which comprise the health
care industry are headquartered outside of the United States, and many important
pharmaceutical and biotechnology discoveries and technological breakthroughs
have occurred outside of the United States, primarily in Japan, the United
Kingdom and Western Europe.
G.T. Capital believes that various global health care industries offer
attractive long-term supply/ demand dynamics. While the U.S., western Europe,
and Japan presently account for over 90% of health care expenditures, this
should change dramatically in the coming decade if the populations of developing
countries devote an increasing percentage of income to health care.
Additionally, G.T. Capital believes demographics on aging point to a significant
increase in demand from the industrialized nations, as the elderly account for a
growing proportion of worldwide health care spending. Finally, in G.T. Capital's
view, technology will continue to expand the range of products and services
offered, with new drugs, medical devices and surgical procedures addressing
medical conditions previously considered untreatable.
In addition to these underlying trends, the United States is presently
experiencing a period of rapid and profound change in its own health care
system, marked by the rise of managed care, the formation of health care
delivery networks, and widespread consolidation across all segments of the
industry. G.T. Capital believes that this transition offers investment
opportunities in those companies acting as consolidators or otherwise gaining
market share at the expense of less efficient competitors.
TELECOMMUNICATIONS FUND
The Telecommunications Fund's investment objective is long-term growth of
capital. The Telecommunications Fund seeks its objective by investing primarily
in equity securities of companies throughout the world engaged in the
development, manufacture or sale of telecommunications services or equipment.
The Telecommunications Fund invests in telecommunications companies which, in
the opinion of G.T. Capital, have potential for above average, long-term growth
in sales and earnings on a sustained basis. There is no assurance that the
Telecommunications Fund will achieve its objective.
At least 65% of the Telecommunications Fund's total assets normally will be
invested in common and preferred stocks and warrants to acquire such securities
issued by telecommunications companies. A "telecommunications" company is an
entity in
Prospectus Page 17
<PAGE>
G.T. GLOBAL THEME FUNDS
which (i) at least 50% of either its revenues or earnings was derived from
telecommunications activities, or (ii) at least 50% of its assets was devoted to
telecommunications activities, based on the company's most recent fiscal year.
The remainder of the assets of the Telecommunications Fund may be invested in
debt securities issued by telecommunications companies, and/or equity and debt
securities of companies outside of the telecommunications industry which, in the
opinion of G.T. Capital, stand to benefit from developments in the
telecommunications industry.
In analyzing companies for investment by the Telecommunications Fund, G.T.
Capital ordinarily looks for several of the following characteristics:
above-average per share earnings growth; high return on invested capital; a
healthy balance sheet; sound financial and accounting policies and overall
financial strength; strong competitive advantages; effective research and
product development and marketing; development of new technologies; efficient
service; pricing flexibility; strong management; and general operating
characteristics that will enable the companies to compete successfully in their
respective markets.
GLOBAL TELECOMMUNICATIONS INDUSTRY INVESTMENT. The telecommunications industry
is comprised of a variety of sectors, ranging from companies concentrating on
established technologies to those primarily engaged in emerging or developing
technologies. The characteristics of companies focusing on the same technology
will vary among countries depending upon the extent to which the technology is
established in the particular country. G.T. Capital will allocate the
Telecommunications Fund's investments among these sectors depending upon its
assessment of their relative long-term growth potentials.
For purposes of the Telecommunications Fund's policy of investing at least 65%
of its total assets in the securities of telecommunications companies, the
companies in which the Telecommunications Fund will invest are those engaged
primarily in designing, developing or providing the following products and
services: communications equipment and services (including equipment and
services for both data and voice transmission); electronic components and
equipment; broadcasting (including television and radio, satellite, microwave
and cable television and narrow-casting); computer equipment, mobile
communications and cellular radio/paging; electronic mail; local and wide area
networking and linkage of word and data processing systems; publishing and
information systems; videotext and teletext; and emerging technologies combining
telephone, television and/or computer systems.
G.T. Capital believes that there are opportunities for continued growth in
demand for components, products, media and systems to collect, store, retrieve,
transmit, process, distribute, record, reproduce and use information. The
pervasive societal impact of communications and information has been accelerated
by the lower costs and higher efficiencies that result from the blending of
computers with telecommunications systems. Accordingly, companies engaged in the
production of methods for using electronic and, potentially, video technology to
communicate information are expected to be important in the Telecommunications
Fund's portfolio. Older technologies, such as photography and print also may be
represented, however.
GLOBAL INVESTMENTS. Each Theme Portfolio expects that, from time to time, a
significant portion of its assets may be invested in the securities of domestic
issuers. Each industry represented in the Theme Portfolios, however, is a global
industry with significant, growing markets outside of the United States. A
sizeable proportion of the companies which comprise such industries are
headquartered outside of the United States.
For these reasons, G.T. Capital believes that a portfolio comprised only of
securities of U.S. issuers does not provide the greatest potential for return
from a Theme Portfolio investment. G.T. Capital uses its financial expertise in
markets located throughout the world and the substantial global resources of the
G.T. Group in attempting to identify those countries and companies then
providing the greatest potential for long-term capital appreciation. In this
fashion, G.T. Capital seeks to enable shareholders to capitalize on the
substantial investment opportunities and the potential for long-term growth of
capital presented by the global industries represented in the Theme Portfolios.
G.T. Capital allocates each Theme Portfolio's assets among securities of
countries and in currency denominations where opportunities for meeting each
Theme Portfolio's investment objective are expected to be the most attractive.
Each Theme Portfolio may invest substantially in securities denominated in one
or more currencies. Under normal conditions, each Theme Portfolio except the
Health Care Fund invests in the securities of issuers located in at least three
countries, including the United States; investments in securities of issuers in
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<PAGE>
G.T. GLOBAL THEME FUNDS
any one country, other than the United States, will represent no more than 40%
of the Financial Services Portfolio's and the Telecommunication Fund's total
assets, and no more than 50% of the Infrastructure Portfolio's, the Natural
Resources Portfolio's and the Consumer Products and Services Portfolio's total
assets. The Health Care Fund is not limited with regard to the percentage of
assets that may be invested in the securities of issuers located in a particular
country.
PRIVATIZATIONS. The governments of some foreign countries have been engaged in
programs of selling part or all of their stakes in government owned or
controlled enterprises ("privatizations"). G.T. Capital believes that
privatizations may offer opportunities for significant capital appreciation and
intends to invest assets of the Theme Portfolios in privatizations in
appropriate circumstances. In certain foreign countries, the ability of foreign
entities such as the Theme Portfolios to participate in privatizations may be
limited by local law, or the terms on which the Theme Portfolios may be
permitted to participate may be less advantageous than those for local
investors. There can be no assurance that foreign governments will continue to
sell companies currently owned or controlled by them or that privatization
programs will be successful.
OTHER POLICIES. The Financial Services Portfolio, Infrastructure Portfolio,
Natural Resources Portfolio, Consumer Products and Services Portfolio and
Telecommunications Fund each may invest up to 15% of its net assets, and the
Health Care Fund up to 10% of its total assets, in securities for which no
readily available market exists, so-called "Illiquid Securities." G.T. Capital
believes that carefully selected investments in joint ventures, cooperatives,
partnerships and state enterprises which are illiquid (collectively, "Special
Situations") could enable the Portfolio to achieve capital appreciation
substantially exceeding the appreciation the Portfolio would realize if it did
not make such investments. However, in order to attempt to limit investment
risk, each of the Theme Portfolios will invest no more than 5% of its total
assets in Special Situations.
The Financial Services Portfolio, Health Care Fund and Telecommunications Fund
each currently will not invest more than 5%, and the Infrastructure Portfolio,
the Natural Resources Portfolio and the Consumer Products and Services Portfolio
no more than 20%, of its total assets in debt securities rated below investment
grade, that is, rated below one of the four highest rating categories by
Standard & Poor's Ratings Group ("S&P") or Moody's Investors Service, Inc.
("Moody's") or deemed to be of equivalent quality in the judgment of G.T.
Capital. See "Risk Factors -- Risks Associated with Debt Securities." Securities
rated in the lowest category of investment grade, that is, securities rated BBB
by S&P or Baa by Moody's, are considered by S&P and Moody's to have speculative
characteristics. Debt securities rated below investment grade are the equivalent
of high yield, high risk bonds, commonly known as "junk bonds." Such securities
may include (i) corporate debt securities and (ii) debt instruments issued by
governments whose debt is unrated and are subject to a greater risk of loss of
principal and interest than those of securities rated above BBB by S&P or Baa by
Moody's in the four highest rating categories described above. The Theme
Portfolios may also use instruments (including forward contracts) often referred
to as "derivatives." See "Options, Futures and Forward Currency Transactions."
TEMPORARY DEFENSIVE STRATEGIES. Each Theme Portfolio retains the flexibility to
respond promptly to changes in market and economic conditions. Accordingly, in
the interest of preserving shareholders' capital and consistent with each Theme
Portfolio's investment objective, G.T. Capital may employ a temporary defensive
investment strategy if it determines such a strategy to be warranted due to
market, economic or political conditions. Under a defensive strategy, each Theme
Portfolio may hold cash (U.S. dollars, foreign currencies or multinational
currency units) and/or invest any portion or all of its assets in debt
securities or high quality money market instruments issued by corporations, or
the U.S. or a foreign government. For temporary defensive purposes, such as
during times of international political or economic uncertainty, most or all of
each Theme Portfolio's investments may be made in the United States and
denominated in U.S. dollars. To the extent any Theme Portfolio 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 the Funds' shares
or to meet its ordinary daily cash needs, each Theme Portfolio may hold cash
(U.S. dollars, foreign currencies or multinational currency units) and may
invest in foreign or domestic high quality money market instruments. Money
market instruments in which each Theme Portfolio may invest include, but are not
limited to, U.S. or foreign government securities; high-grade commercial paper;
bank certificates
Prospectus Page 19
<PAGE>
G.T. GLOBAL THEME FUNDS
of deposit; bankers' acceptances; and repurchase agreements related to any of
the foregoing. High-grade commercial paper refers to commercial paper rated A-1
by S&P or P-1 by Moody's or, if unrated, determined by G.T. Capital to be of
comparable quality.
INVESTMENTS IN OTHER INVESTMENT COMPANIES. Each Theme Portfolio may invest up to
10% of its total assets in other investment companies. As a shareholder in an
investment company, that Theme Portfolio would bear its ratable share of that
investment company's expenses, including its advisory and administration fees.
At the same time, the Theme Portfolio would continue to pay its own management
fees and other expenses.
BORROWING. From time to time, it may be advantageous for a Theme Portfolio to
borrow money rather than sell existing portfolio positions to meet redemption
requests. Accordingly, a Theme Portfolio may borrow from banks or may borrow
through reverse repurchase agreements and "roll" transactions in connection with
meeting requests for the redemptions of a Theme Portfolio's shares.
A reverse repurchase agreement is a borrowing transaction in which a Theme
Portfolio transfers possession of a security to another party, such as a bank or
broker/dealer, in return for cash, and agrees to repurchase the security in the
future at an agreed upon price which includes an interest component. A "roll"
borrowing transaction involves a Theme Portfolio's sale of securities together
with its commitment (for which that Theme Portfolio may receive a fee) to
purchase similar, but not identical, securities at a future date.
Any Theme Portfolio's borrowings will not exceed 33 1/3% of that Theme
Portfolio's total assets, i.e., that Theme Portfolio's total assets at all times
will equal at least 300% of the amount of outstanding borrowings. If market
fluctuations in the value of the Theme Portfolio's securities holdings or other
factors cause the ratio of the Theme Portfolio's total assets to outstanding
borrowings to fall below 300%, within three days (excluding Sundays and
holidays) of such event the Theme Portfolio may be required to sell portfolio
securities to restore the 300% asset coverage, even though from an investment
standpoint such sales might be disadvantageous. A Theme Portfolio also may
borrow up to 5% of its total assets for temporary or emergency purposes other
than to meet redemptions. Any borrowing by a Theme Portfolio may cause greater
fluctuation in the value of its shares than would be the case if a Theme
Portfolio did not borrow. If a Theme Portfolio's borrowings exceed 5% of its
total assets, no additional investments will be made.
SECURITIES LENDING. Each Theme Portfolio is authorized to make loans of its
portfolio securities to broker/dealers or to other institutional investors. The
borrower must maintain with the Theme Portfolio's custodian collateral
consisting of cash, U.S. government securities or other liquid, high-grade debt
securities equal to at least the value of the borrowed securities, plus any
accrued interest. The Theme Portfolios will receive any interest paid on the
loaned securities and a fee and/or a portion of the interest earned on the
collateral. Each Theme Portfolio 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 securities or possible loss of rights in the
collateral should the borrower fail financially.
WHEN-ISSUED OR FORWARD COMMITMENT SECURITIES. The Theme Portfolios may purchase
debt securities on a "when-issued" basis and may purchase or sell such
securities on a "forward commitment" basis in order to hedge against anticipated
changes in interest rates and prices. The price, which 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 a Theme
Portfolio 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 Theme
Portfolio. If the Theme Portfolio disposes of the right to acquire a when-issued
security prior to its acquisition or disposes of its right to deliver or receive
against a forward commitment, it may incur a gain or loss. At the time a Theme
Portfolio 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 its custodian and will be
marked to market daily. There is a risk that the securities may not be delivered
and that the Theme Portfolio may incur a loss.
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G.T. GLOBAL THEME FUNDS
RISK FACTORS
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FINANCIAL SERVICES FUND AND FINANCIAL SERVICES PORTFOLIO
The Financial Services Portfolio concentrates its assets in the global financial
services industry, and thus should not be considered as a complete investment
program. Because the Financial Services Portfolio focuses on this specific
investment area, the price of Financial Services Fund shares may be more
volatile than that of investment companies that do not concentrate their
investments in such a manner. The value of Financial Services Fund shares may be
susceptible to factors affecting the financial services industry.
The financial services industry may be subject to greater governmental
regulation than many other industries and changes in governmental policies and
the need for regulatory approvals may have a material effect on the services of
this industry. Banks, savings institutions and loan associations, and finance
companies are subject to extensive governmental regulation which may limit both
the financial commitments they can make, including the amounts and types of
loans, and the interest rates and fees they can charge. These companies are
subject to rapid business changes, significant competition, value fluctuations
due to the concentration of loans in particular industries significantly
affected by economic conditions (such as real estate or energy) and volatile
performance dependent upon the availability and cost of capital and prevailing
interest rates. In addition, general economic conditions significantly affect
these companies. Credit and other losses resulting from the financial difficulty
of borrowers or other third parties potentially have an adverse effect on
companies in this industry. Moreover, neither federal insurance of deposits nor
governmental regulation ensures the solvency or profitability of commercial
banks or thrifts or their holding companies, or insures against any risk of
investment in the securities issued by such institutions.
Similar considerations affect the financial services sector in foreign
countries. In particular, government regulation in certain foreign countries may
include interest rate controls, credit controls and price controls. Moreover, in
some cases foreign governments have taken steps to nationalize the operations of
certain companies, such as banks, in the financial services sector.
The laws generally separating commercial and investment banking, as well as laws
governing the capitalization and regulation of the industry, currently are being
studied by U.S. governmental authorities. The services offered by banks may
expand if legislation broadening bank powers is enacted. While providing
diversification, expanded powers could expose banks to well-established
competitors, particularly as the historical distinctions between banks and other
financial institutions erode. Increased competition may result from the
broadening of regional and national interstate powers, which has led to a
decline in the number of publicly traded regional banks, and from the aggressive
expansion of larger, publicly held foreign banks. Foreign banks, particularly
those of Japan, recently have reported financial difficulties attributed to
increased competition, regulatory changes, and general economic difficulties.
In addition, recent legislation has altered significantly the regulatory
environment for savings institutions. This legislation was enacted in response
to financial problems experienced by a number of thrifts due to inadequate
capitalization resulting from diversification into commercial lending and other
areas and alleged fraud and mismanagement, as well as in response to
deterioration in the financial condition of the Federal Savings and Loan
Insurance Corporation, the federal agency that had insured deposits for most
thrifts. The Federal Deposit Insurance Corporation ("FDIC") now insures deposits
in both banks and thrifts. The legislation has given federal regulators
substantial authority to use all of the assets of a bank or thrift holding
company to satisfy federal claims against an insolvent thrift or bank owned by
the holding company. These changes have expanded the risk to holding company
shareholders in the event of the insolvency of any depository institution owned
by the holding company. Additionally, changes in the extent to which the FDIC
will insure deposits may result in a higher cost of funds for banks and thrifts
and the loss of deposits to competitors that are viewed as better capitalized.
The financial services area currently is changing relatively rapidly as existing
distinctions between
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G.T. GLOBAL THEME FUNDS
various financial service segments become less clear. For instance, recent
business combinations have included insurance, finance, and securities brokerage
under single ownership. Some primarily retail corporations have expanded into
securities and insurance fields. In addition, investment banking, securities
brokerage and investment advisory companies in particular are subject to
government regulation and risk due to securities trading and underwriting
activities.
Many of the investment considerations discussed in connection with banks,
savings institutions and loan associations, and finance companies also apply to
insurance companies. The performance of insurance investments will be subject to
risk from several factors. The earnings of insurance companies will be affected
by interest rates, pricing (including severe pricing competition, from time to
time), claims activity, marketing competition and general economic conditions.
Particular insurance lines also will be influenced by specific matters. Property
and casualty insurer profits may be affected by certain weather catastrophes and
other disasters. Life and health insurer profits may be affected by mortality
and morbidity rates. Individual companies may be exposed to material risks,
including reserve inadequacy, problems in investment portfolios (due to real
estate or "junk" bond holdings, for example), and the inability to collect from
reinsurance carriers. Insurance companies are subject to extensive governmental
regulation, including the imposition of maximum rate levels, which may not be
adequate for some lines of business. Proposed or potential anti-trust or tax law
changes also may affect adversely insurance companies' policy sales, tax
obligations and profitability. In addition, significant insurance companies
recently have reported liquidity or solvency difficulties, or have experienced
credit rating downgrades.
INFRASTRUCTURE FUND AND INFRASTRUCTURE PORTFOLIO
The Infrastructure Portfolio primarily invests its assets in the global
infrastructure industries, and thus should not be considered as a complete
investment program. Because the Infrastructure Portfolio focuses on this
specific investment area, the price of Infrastructure Fund shares may be more
volatile than that of investment companies that do not concentrate their
investments in such a manner. The value of Infrastructure Fund shares may be
susceptible to factors affecting the infrastructure industries. In both the U.S.
and foreign countries, these industries may be subject to greater political,
environmental and other governmental regulation than many other industries.
The nature of such regulation continues to evolve in both the United States and
foreign countries, and changes in governmental policies and the need for
regulatory approvals may have a material effect on the products and services of
this industry. Electric, gas, water and most telecommunications companies in the
United States, for example, are subject to both federal and state regulation
affecting permitted rates of return and the kinds of services that may be
offered. Changes in prevailing interest rates may also affect the Infrastructure
Fund's share values because prices of equity and debt securities of
infrastructure companies often tend to increase when interest rates decline and
decrease when interest rates rise.
In addition, many infrastructure companies, including coal, steel, and other
types of companies, have historically been subject to the risks attendant to
increases in fuel and other operating costs, high interest costs on borrowed
funds, costs associated with compliance with environmental and other safety
regulations and changes in the regulatory climate. Such governmental regulation
may also hamper the development of new technologies, and it is impossible to
predict the direction, type or effect of any future regulation. Further
competition is intense for many infrastructure companies. As a result, many of
these companies may be adversely affected in the future and such companies may
be subject to increased share price volatility. In addition, many companies have
diversified into oil and gas exploration and development, therefore returns may
be more sensitive to energy prices. Other infrastructure companies, such as
water supply companies, are in a highly fragmented industry due to local
ownership. Generally these companies are mature and are experiencing little or
no growth.
NATURAL RESOURCES FUND AND NATURAL RESOURCES PORTFOLIO
The Natural Resources Portfolio primarily invests its assets in the global
natural resource industries, and thus should not be considered as a complete
investment program. Because the Natural Resources Portfolio focuses on this
specific investment area, the price of Natural Resources Fund shares may be more
volatile than that of investment companies that do not concentrate their
investments in such a manner. The value of Natural Resources Fund shares may be
susceptible to factors affecting the natural resource industries. In both the
U.S. and foreign countries, for example, these industries may be subject to
greater political, environmental and other governmental regulation than other
industries.
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G.T. GLOBAL THEME FUNDS
The nature of such regulation continues to evolve in both the U.S. and foreign
countries, and changes in governmental policies and the need for regulatory
approvals may have a material effect on the products and services of natural
resource companies. For example, the exploration, development and distribution
of coal, oil and gas in the United States are subject to significant federal and
state regulation, which may affect rates of return on such investments and the
kinds of services that may be offered.
In addition, many natural resource companies historically have been subject to
significant costs associated with compliance with environmental and other safety
regulations and changes in the regulatory climate. Such governmental regulations
may also hamper the development of new technologies, and it is impossible to
predict the direction, type or effect of any future regulation.
Further, competition is intense for many natural resource companies. As a
result, many of these companies may be adversely affected in the future and the
value of the securities issued by such companies may be subject to increased
share price volatility.
The value of the Natural Resources Portfolio's securities will fluctuate in
response to stock market developments, as well as market conditions for the
particular natural resources with which the issuer is involved. The price of the
commodity will fluctuate due to changes in worldwide levels of inventory, and
changes, perceived or actual, in production and consumption. The values of
natural resources may fluctuate directly with respect to various stages of the
inflationary cycle and perceived inflationary trends and are subject to numerous
factors, including national and international politics. The Natural Resources
Portfolio's investments in precious metals are subject to many risks, including
substantial price fluctuations over short periods of time. Further, the Natural
Resources Portfolio's investments in companies are expected to be subject to
irregular fluctuations in earnings, because these companies are affected by
changes in the availability of money, the level of interest rates, and other
factors.
CONSUMER PRODUCTS AND SERVICES FUND AND CONSUMER PRODUCTS AND SERVICES PORTFOLIO
The Consumer Products and Services Portfolio primarily invests its assets in the
global consumer products and services industries, and thus should not be
considered as a complete investment program. Because the Consumer Products and
Services Portfolio focuses on this specific investment area, the price of
Consumer Products and Services Fund shares may be more volatile than that of
investment companies that do not concentrate their investments in such a manner.
The value of Consumer Products and Services Fund shares will be susceptible to
factors affecting the consumer products and services industries.
General economic conditions significantly affect these companies. The
performance of consumer products manufacturers, marketers, retailers and
distributors relates closely to the performance of the overall economy, interest
rates and consumer confidence. Such performance also depends substantially on
disposable household income and consumer spending, both of which are closely
tied to the actual or perceived performance of the overall economy. In addition,
changes in demographics and consumer tastes may also affect the demand for, and
success of, consumer products and services in the global marketplace. Further,
competition is keen for many consumer products and services companies.
As a result, many consumer products and services companies may be adversely
affected and the value of the securities issued by such companies may be subject
to increased share price volatility. In addition, many consumer products and
services companies have unpredictable earnings, due in part to changes in
consumer tastes and intense competition. Also, the consumer products and
services industries have reacted strongly to technology development and to the
threat of government regulation. These industries may be subject to greater
government regulation, including trade regulation, than many other industries.
Changes in governmental policy and the need for regulatory approvals may have a
material effect on the products and services of the consumer products and
services industries. Such governmental regulations may also hamper the
development of new business opportunities, and it is impossible to predict the
direction, type or effect of any future government regulation.
HEALTH CARE FUND
The Health Care Fund primarily invests its assets in the global health care
industry and, as a result, should not be considered as a complete investment
program. Because the Health Care Fund focuses on this specific investment area,
the price of Health Care Fund shares may be more volatile than that of
investment companies that do not concentrate their investments in such a manner.
The value of Health Care Fund shares may be susceptible to factors affecting the
health care industry. The
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G.T. GLOBAL THEME FUNDS
health care industry generally is subject to substantial government regulation;
accordingly, changes in government policies or regulation could have a material
effect on the demand for products and services offered by health care companies
and therefore could affect the performance of the Health Care Fund. In addition,
the products and services offered by such companies may be subject to rapid
obsolescence caused by technological and scientific advances. Moreover, although
the Health Care Fund's portfolio will consist of securities of a substantial
number of issuers, the Health Care Fund's status as a "non-diversified"
investment company pursuant to the 1940 Act means that, with respect to 50% of
the Health Care Fund's total assets, more than 5% may be invested in the
securities of a single issuer. Because the Health Care Fund concentrates in
health care companies and is non-diversified, the value of the Health Care
Fund's shares may fluctuate more widely, and the Health Care Fund may present
greater risk than funds investing in a greater number of industries or issuers.
TELECOMMUNICATIONS FUND
The Telecommunications Fund primarily invests its assets in the global
telecommunications industry and, as a result, should not be considered as a
complete investment program. Because the Telecommunications Fund focuses on this
specific investment area, the price of Telecommunications Fund shares may be
more volatile than that of investment companies that do not concentrate their
investments in such a manner. The value of Telecommunications Fund shares may be
susceptible to factors affecting the telecommunications industry. This industry
may be subject to greater governmental regulation than many other industries and
changes in governmental policies and the need for regulatory approvals may have
a material effect on the products and services of this industry. Telephone
operating companies in the United States, for example, are subject to both
federal and state regulation affecting permitted rates of return and the kinds
of services that may be offered. Certain types of companies represented in the
Fund are engaged in fierce competition for a share of the market for their
products. In recent years, these have been companies providing goods and
services such as private and local area networks and telephone set equipment.
Moreover, the investment flexibility of the Telecommunications Fund may be
restricted by the necessity of satisfying certain diversification requirements
in order to maintain the qualification of the Telecommunications Fund as a
regulated investment company within the meaning of the Internal Revenue Code of
1986, as amended ("Code").
RISKS ASSOCIATED WITH DEBT SECURITIES. The value of the debt securities held by
each Theme Portfolio generally will vary conversely with market interest rates.
If interest rates in a market fall, the value of the debt securities held by
each Theme Portfolio ordinarily will rise. If market interest rates increase,
however, the debt securities owned by each Theme Portfolio in that market will
be likely to decrease in value.
As discussed above, the Infrastructure Portfolio, Natural Resources Portfolio
and Consumer Products and Services Portfolio may each invest up to 20% of its
total assets in debt securities rated below investment grade. Such investments
involve a high degree of risk. However, the Infrastructure Portfolio, Natural
Resources Portfolio and Consumer Products and Services Portfolio will not invest
in debt securities that are in default as to payment of principal and interest.
Debt rated BB, B, CCC, CC and C by S&P and debt rated Ba, B, Caa, Ca, C by
Moody's is regarded, 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 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
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G.T. GLOBAL THEME FUNDS
current financial condition may be better or worse than a rating indicates. See
"Description of Debt Ratings" in the Statement of Additional Information for a
full discussion of Moody's and S&P's ratings.
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. 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 of corporate issuers frequently have call or
buy-back features which would permit an issuer to call or repurchase the
security from the Theme Portfolios. If an issuer exercises these provisions in a
declining interest rate market, the Theme Portfolios may have to replace the
security with a lower yielding security, resulting in a decreased return for
investors. In addition, the Theme Portfolios 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 each
of the Theme Portfolios 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 Theme Portfolios to obtain
accurate market quotations for purposes of valuing the Theme Portfolios
portfolio investments. The Theme Portfolios 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 Theme Portfolios may
invest include: (i) potential adverse publicity; (ii) heightened sensitivity to
general economic or political conditions; and (iii) the likely adverse impact of
a major economic recession. The Theme Portfolios may also incur additional
expenses to the extent it is required to seek recovery upon a default in the
payment of principal or interest on its portfolio holdings, and the Theme
Portfolios may have limited legal recourse in the event of a default.
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 each of the Theme Portfolios and consider their ability to
assume the investment risks involved before making an investment.
OTHER RISK FACTORS. While each Theme Portfolio's portfolio normally will include
securities of established suppliers of traditional products and services, each
Theme Portfolio may invest in smaller companies which can benefit from the
development of new products and services. These smaller companies may present
greater opportunities for capital appreciation, but may also involve greater
risks than large, established issuers. Such smaller companies may have limited
product lines, markets or financial resources, and their securities may trade
less frequently and in more limited volume than the securities of larger, more
established companies. As a result, the prices of the securities of such smaller
companies may fluctuate to a greater degree than the prices of the securities of
other issuers.
G.T. Capital believes that a global portfolio of investments in the industries
represented by the Theme Portfolios may be less subject to market risk (the risk
attendant to investing in a particular market) and price fluctuation than a
portfolio invested solely in the securities of domestic issuers. Under each of
the Theme Portfolios' policies, G.T. Capital may shift the country allocations
of the Theme Portfolios' investments as market conditions in individual
countries change. Moreover, the number of different investment opportunities
from which the Theme Portfolios may choose is significantly
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G.T. GLOBAL THEME FUNDS
broader than that of a fund investing solely in the securities of U.S.
companies.
Foreign investing entails certain risks. The securities of non-U.S. issuers
generally will not be registered with, nor the issuers thereof be subject to,
the reporting requirements of the SEC. Accordingly, there may be less publicly
available information about foreign securities and issuers than is available
about domestic securities and issuers. Foreign companies generally are not
subject to uniform accounting, auditing and financial reporting standards,
practices and requirements comparable to those applicable to domestic companies.
In addition, certain costs attributable to foreign investing, such as custody
charges, are higher than those attributable to domestic investing. Securities of
some foreign companies are less liquid and their prices may be more volatile
than securities of comparable domestic companies. The Theme Portfolios' interest
and dividends from foreign issuers may be subject to non-U.S. withholding taxes,
thereby reducing the Theme Portfolios' net investment income.
With respect to some foreign countries, there is the increased possibility of
expropriation or confiscatory taxation, limitations on the removal of funds or
other assets of the Theme Portfolios' political or social instability, or
diplomatic developments which could affect the Theme Portfolios' investments in
those countries. Moreover, individual foreign economies may differ favorably or
unfavorably from the U.S. economy in such respects as growth of gross national
product, rate of inflation, rate of savings and capital reinvestment, resource
self-sufficiency and balance of payments positions.
Since the Theme Portfolios may invest substantially in securities denominated in
currencies other than the U.S. dollar, and since the Theme Portfolios may hold
foreign currencies, the Theme Portfolios 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 the Funds' shares, and also may affect the value of
dividends and interest earned by the Theme Portfolios and gains and losses
realized by the Theme Portfolios. 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.
Each Theme Portfolio may invest in issuers domiciled in "emerging markets,"
I.E., those countries determined by G.T. Capital to have developing or emerging
economies and markets. Investing in emerging markets involves risks in addition
to those risks involved in foreign investing.
For example, many emerging market countries have experienced substantial, and in
some periods extremely high, rates of inflation for many years. In addition,
economies in emerging markets generally are dependent heavily upon international
trade and, accordingly, have been and 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.
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. In addition, brokerage
commissions, custodial services and other costs relating to investment in
foreign markets generally are more expensive than in the United States,
particularly with respect to emerging markets.
OPTIONS, FUTURES AND FORWARD CURRENCY TRANSACTIONS. Each Theme Portfolio may use
forward currency contracts, futures contracts, options on securities, options on
indices, options on currencies, and options on futures contracts to implement
strategies to attempt to hedge its portfolio, I.E., reduce the overall level of
investment risk normally associated with the portfolio. These instruments are
often referred to as "derivatives," which may be defined as financial
instruments whose performance is derived, at least in part, from the performance
of another asset (such as a security, currency or an index of securities). Each
Theme Portfolio may enter into such instruments up to the full value of its
portfolio assets. There can be no assurance that these hedging efforts will
succeed. These techniques are described below and are further detailed in the
Statement of Additional Information.
To attempt to hedge against adverse movements in exchange rates between
currencies, each Theme Portfolio 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 Theme Portfolios may
enter into forward currency contracts either with respect to specific
transactions or with respect to that Theme Portfolio's portfolio positions. For
example, when a Theme Portfolio anticipates making a purchase or
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G.T. GLOBAL THEME FUNDS
sale of a security, that Theme Portfolio 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, a Theme
Portfolio may enter into a forward contract to sell the currency G.T. Capital
expects to decline in an amount approximating the value of some or all of that
Theme Portfolio's portfolio securities denominated in a foreign currency. Each
Theme Portfolio also may purchase and sell put and call options on currencies,
futures contracts on currencies and options on futures contracts on currencies
to hedge against movements in exchange rates.
In addition, a Theme Portfolio may purchase and sell put and call options on
equity and debt securities to hedge against the risk of fluctuations in the
prices of securities held by that Theme Portfolio or that G.T. Capital intends
to include in the Theme Portfolio's portfolio. The Theme Portfolio also may
purchase and sell put and call options on stock indexes. Such stock index
options serve to hedge against overall fluctuations in the securities markets
generally or in the natural resources market sector specifically, rather than
anticipated increases or decreases in the value of a particular security.
Further, a Theme Portfolio may sell stock index futures contracts and may
purchase put options or write call options on such futures contracts to protect
against a general stock market decline or a decline in the financial services
market sector that could affect adversely a Theme Portfolio's holdings. A Theme
Portfolio also may buy stock index futures contracts and purchase call options
or write put options on such contracts to hedge against a general stock market
or market sector advance and thereby attempt to lessen the cost of future
securities acquisitions. A Theme Portfolio may use interest rate futures
contracts and options thereon to hedge the debt portion of its portfolio against
changes in the general level of interest rates.
In addition, each Theme Portfolio may purchase and sell put and call options on
securities, currencies and indices that are traded on recognized securities
exchanges and over-the-counter markets.
These practices may result in the loss of principal under certain conditions. In
addition, certain provisions of the Code limit the extent to which a Theme
Portfolio may enter into forward contracts or futures contracts, or engage in
options transactions. See "Taxes" in the Statement of Additional Information.
Although a Theme Portfolio might not employ any of the foregoing strategies, its
use of forward currency contracts, options and futures 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 or in the appropriate market sector and movements in
interest rates and currency markets; (2) imperfect correlation, or even no
correlation, between movements in the price of options, forward contracts,
futures contracts or options thereon and movements in the price of the currency
or security hedged or used for cover; (3) the fact that skills and techniques
needed to trade options, futures contracts and options thereon or to use forward
currency contracts are different from those needed to select the securities in
which a Theme Portfolio invests; (4) lack of assurance that a liquid secondary
market will exist for any particular option, futures contract or option thereon
at any particular time; (5) the possible inability of a Theme Portfolio to
purchase or sell a portfolio security at a time when it would otherwise be
favorable for it to do so, or the possible need for a Theme Portfolio to sell a
security at a disadvantageous time, due to the need for the Theme Portfolio to
maintain "cover" or to segregate securities in connection with hedging
transactions; and (6) the possible need 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
market movements, currency exchange rates or interest rates in utilizing a
strategy for a Theme Portfolio, the Theme Portfolio would be in a better
position if it had not hedged at all. A Theme Portfolio may 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.
REPURCHASE AGREEMENTS. Repurchase agreements are transactions in which a Theme
Portfolio purchases a security from a bank or recognized securities dealer and
simultaneously commits to resell that security to the bank or dealer at an
agreed-upon price, date, and market rate of interest
Prospectus Page 27
<PAGE>
G.T. GLOBAL THEME FUNDS
unrelated to the coupon rate or maturity of the purchased security. Although
repurchase agreements carry certain risks not associated with direct investments
in securities, including possible decline in the market value of the underlying
securities and delays and costs to the Theme Portfolio if the other party to the
repurchase agreement becomes bankrupt, the Theme Portfolios intend to enter into
repurchase agreements only with banks and dealers believed by G.T. Capital to
present minimal credit risks in accordance with guidelines established by the
Company's Board of Directors, or a Portfolio's Board of Trustees, as applicable.
G.T. Capital will review and monitor the creditworthiness of such institutions
under the Board's general supervision. See "Investment Objective and Policies --
Repurchase Agreements" in the Statement of Additional Information.
OTHER INFORMATION. The investment objective of each Fund may not be changed
without the approval of a majority of that 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 Fund's
shares represented at a meeting at which more than 50% of the outstanding shares
are represented, or (ii) more than 50% of the outstanding shares. In addition,
each Fund has adopted certain investment limitations as fundamental policies
which also may not be changed without shareholder approval. Unless specifically
noted, the Portfolios' and the Funds' investment policies described in this
Prospectus, and in the Statement of Additional Information, including the
policies with respect to investment in its particular sector's securities and
the percentage limitations with respect to such investments, are not fundamental
policies and may be changed by vote of the Company's Board of Directors or the
Portfolio's Board of Trustees, as applicable, without shareholder approval. Each
Fund's policies regarding concentration and lending, and the percentage of that
Fund's assets that may be committed to borrowing, are fundamental policies and
may not be changed without shareholder approval. See "Investment Limitations" in
the Statement of Additional Information.
OTHER INFORMATION REGARDING THE PORTFOLIOS. The Financial Services Fund,
Infrastructure Fund, Natural Resources Fund and Consumer Products and Services
Fund may each withdraw its investment in its corresponding Portfolio at any
time, if the Board of Directors of the Company determines that it is in the best
interests of that Fund and its shareholders to do so. Upon such withdrawal, the
Board would consider what action might be taken, including the investment of all
the investable assets of that Fund in another pooled investment entity having
substantially the same investment objective as that Fund or the retention by
that Fund of its own investment adviser to manage that Fund's assets in
accordance with the investment objective, policies and limitations discussed
herein with respect to each such Fund and its investment in its corresponding
Portfolio.
The approval of the Financial Services Fund, Infrastructure Fund, Natural
Resources Fund and Consumer Products and Services Fund and of other investors in
their corresponding Portfolio, if any, is not required to change the investment
objective, policies or limitations of that Portfolio, unless otherwise
specified. Written notice shall be provided to shareholders of such Fund thirty
days prior to any changes in its corresponding Portfolio's investment objective.
If the objective of that Portfolio changes and the shareholders of the
corresponding Fund do not approve a parallel change in such Fund's investment
objective, that Fund would seek an alternative investment vehicle or directly
retain its own investment adviser.
As previously described, investors should be aware that the Financial Services
Fund, Infrastructure Fund, Natural Resources Fund and Consumer Products and
Services Fund, unlike mutual funds which directly acquire and manage their own
portfolios of securities, seek to achieve their investment objective by
investing all of their investable assets in the Financial Services Portfolio,
Infrastructure Portfolio, Natural Resources Portfolio and Consumer Products and
Services Portfolio, respectively, each of which is a separate investment
company, as previously described. Since its corresponding Fund will invest only
in its corresponding Portfolio, that Fund's shareholders will acquire only an
indirect interest in the investments of that Portfolio. Historically, G.T.
Capital and G.T. Global have sponsored traditionally structured funds, and,
therefore, have limited experience with funds that invest all their assets in a
separate portfolio.
In addition to selling its interest to its corresponding Fund, the Financial
Services Portfolio, Infrastructure Portfolio, Natural Resources Portfolio and
Consumer Products and Services Portfolio may each sell its interests to other
non-affiliated investment companies and/or other institutional investors. All
institutional investors in a Portfolio will pay a proportionate share of that
Portfolio's expenses and will invest in that Portfolio on the same terms and
conditions. However, if another investment company invests all of its assets in
a Portfolio, it
Prospectus Page 28
<PAGE>
G.T. GLOBAL THEME FUNDS
would not be required to sell its shares at the same public offering price as
the Portfolio's corresponding Fund and may charge different sales commissions.
Therefore, investors in the Financial Services Fund, Infrastructure Fund,
Natural Resources Fund and Consumer Products and Services Fund may experience
different returns from investors in another investment company which invests
exclusively in its corresponding Portfolio. As of the date of this Prospectus,
the Financial Services Fund, Infrastructure Fund, Natural Resources Fund and
Consumer Products and Services Fund are the only institutional investors in
their corresponding Portfolios. However, the Financial Services Portfolio,
Infrastructure Portfolio, Natural Resources Portfolio and Consumer Products and
Services Portfolio expect to offer beneficial interests to other institutional
investors in the future. Although interests in the Portfolios are not currently
available, either directly or indirectly, to individual investors through other
funds, information regarding any such funds will be available from G.T. Global
at the appropriate toll-free telephone number provided in the Shareholder
Account Manual.
Investors in the Financial Services Fund, Infrastructure Fund, Natural Resources
Fund and Consumer Products and Services Fund should be aware that such Funds'
investment in its corresponding Portfolio may be materially affected by the
actions of large investors in such Portfolio, if any. For example, as with all
open-end investment companies, if a large investor were to redeem its interest
in a Portfolio, that Portfolio's remaining investors could experience higher pro
rata operating expenses, thereby producing lower returns. As a result, that
Portfolio's security holdings may become less diverse, resulting in increased
risk. Institutional investors in a Portfolio that have a greater pro rata
ownership interest in that Portfolio than its corresponding Fund could have
effective voting control over the operation of that Portfolio. A change in a
Portfolio's fundamental objective, policies and restrictions, which is not
approved by the shareholders of its corresponding Fund could require such Fund
to redeem its interest in the Portfolio. Any such redemption could result in a
distribution in kind of portfolio securities (as opposed to a cash distribution)
by that Portfolio. Should such a distribution occur, the Financial Services
Fund, Infrastructure Fund, Natural Resources Fund and Consumer Products and
Services Fund could incur brokerage fees or other transaction costs in
converting such securities to cash. In addition, a distribution in kind could
result in a less diversified portfolio of investments for the Financial Services
Fund, Infrastructure Fund, Natural Resources Fund and Consumer Products and
Services Fund and could affect adversely the liquidity of such Funds.
See "Management" for a complete description of the investment management fee and
other expenses associated with the investment of the Financial Services Fund,
Infrastructure Fund, Natural Resources Fund and Consumer Products and Services
Fund in their corresponding Portfolios. This Prospectus, and the Statement of
Additional Information dated March 1, 1995, as revised June 1, 1995, contain
more detailed information about the organizational structure of the Financial
Services Fund, Infrastructure Fund, Natural Resources Fund and Consumer Products
and Services Fund and their corresponding Portfolios, including information
related to: (i) the investment objective, policies and restrictions of such
Funds and their Portfolios; (ii) the Board of Directors and officers of the
Company, the Trustees and officers of the Portfolios, the administrator of such
Funds and the investment manager and administrator of the Portfolios; (iii)
portfolio transactions and brokerage commissions; (iv) such Funds' shares,
including the rights and liabilities of its shareholders; (v) additional
performance information, including the method used to calculate yield and total
return; and (vi) the determination of the value of the shares of such Funds.
Prospectus Page 29
<PAGE>
G.T. GLOBAL THEME FUNDS
HOW TO INVEST
- --------------------------------------------------------------------------------
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 at
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 must be provided to the Transfer Agent that a
bank wire is being sent. A bank may charge a service fee for wiring money to a
Fund. 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 the Funds' shares will not be issued unless a written request is
submitted to the Transfer Agent. Shares of the Funds 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 30
<PAGE>
G.T. GLOBAL THEME FUNDS
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 WILL RESULT IN A SHAREHOLDER 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 EMERGING MARKETS FUND
-- G.T. GLOBAL: NEW PACIFIC GROWTH FUND*
-- G.T. GLOBAL: EUROPE GROWTH FUND
-- G.T. LATIN AMERICA 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 the 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 information to his or
her Financial Advisor. Exchange orders will be accepted by telephone provided
that the exchange involves only uncertificated shares on deposit in the
shareholder's account or for which certificates have previously been deposited.
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
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. Exchanges may also be made by mail.
Investors in Wrap Fee Accounts and Advisory Accounts interested in making an
exchange should contact their Financial Advisors to request the prospectus of
the other 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 the Funds' 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 31
<PAGE>
G.T. GLOBAL THEME FUNDS
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 in good order and any required
supporting documentation. Redemption requests received before the close of
regular trading on the NYSE on a 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 with Pre-Designated Accounts should request that redemption
proceeds be sent either by bank wire or by check. The minimum redemption amount
for a bank wire is $1,000. Shareholders requesting a bank wire should allow two
business days from the time the redemption request is effected for the proceeds
to be deposited in the shareholder's Pre-Designated Account. See "How to Redeem
Shares -- Other Important Redemption Information." Shareholders may change their
Pre-Designated Accounts only by a letter of instruction to the Transfer Agent
containing all account signatures, each of which must be guaranteed. The
Transfer Agent currently does not charge a bank wire service fee for each wire
redemption sent, but reserves the right to do so in the future. The
shareholder's bank may charge a bank wire service fee.
REDEMPTIONS BY TELEPHONE. Redemption requests may be made by telephone by
calling the Transfer Agent at the appropriate toll-free number provided in the
Shareholder Account Manual. Shareholders who hold certificates for shares may
not redeem by telephone. REDEMPTION REQUESTS MAY NOT BE MADE BY TELEPHONE FOR
THIRTY DAYS FOLLOWING ANY CHANGE OF THE SHAREHOLDER'S ADDRESS OF RECORD.
Shareholders automatically have telephone privileges to authorize redemptions.
The 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.
REDEMPTIONS BY MAIL. Redemption requests should be mailed directly to the
Transfer Agent at the appropriate address provided in the Shareholder Account
Manual. As discussed above, requests for payment of redemption proceeds to a
party other than the shareholder of record and/or requests that redemption
proceeds be mailed to an address other than the shareholder's address of record
require a signature guarantee. In addition, if the shareholder's address of
record has been changed within the preceding thirty days, a signature guarantee
is required. Redemptions of shares for which certificates have been issued must
be accompanied by properly endorsed share certificates.
OTHER IMPORTANT REDEMPTION INFORMATION. A request for redemption will not be
processed until all of the necessary documentation has been received in good
order. A shareholder in a Wrap Fee Account or Advisory Account who is in doubt
as to what documents are required should contact his or her Financial Advisor.
Prospectus Page 32
<PAGE>
G.T. GLOBAL THEME FUNDS
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 the Funds have not
yet received good payment, the Funds may delay payment of redemption proceeds
until they have assured themselves 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 shares, see the Shareholder Account
Manual in this Prospectus, or contact your Financial Advisor.
Prospectus Page 33
<PAGE>
G.T. GLOBAL THEME FUNDS
SHAREHOLDER ACCOUNT MANUAL
- --------------------------------------------------------------------------------
Purchase, exchange and redemption orders may 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;" "Dividends, Other Distributions and Federal Income
Taxation -- Taxes" and "How to Redeem Shares" for more information.
Each Fund's Transfer Agent is G.T. GLOBAL INVESTOR SERVICES, INC.
INVESTMENTS BY MAIL
Send the 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, class of
shares, 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, CA 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, CA 94120-7893
OVERNIGHT MAIL
Overnight mail services do not deliver to post office boxes. To send purchase,
exchange or redemption orders by overnight mail, follow the above instructions
but send the instructions to the following address:
G.T. Global Investor Services
California Plaza
2121 N. California Boulevard
Suite 450
Walnut Creek, CA 94596
ADDITIONAL QUESTIONS
Shareholders with additional questions regarding purchase, exchange and
redemption procedures should call G.T. Global at 1-800-223-2138.
Prospectus Page 34
<PAGE>
G.T. GLOBAL THEME FUNDS
CALCULATION OF NET ASSET VALUE
- --------------------------------------------------------------------------------
Each Fund calculates its net asset value as of the close of regular trading on
the floor of the NYSE (currently 4:00 p.m. Eastern Time, unless weather,
equipment failure or other factors contribute to an earlier closing time), each
Business Day. Each Fund's net asset value per share is computed by determining
the value of its total assets (which, in the case of the Financial Services
Fund, Infrastructure Fund, Natural Resources Fund and Consumer Products and
Services Fund is the value of such Funds' investment in its corresponding
Portfolio), subtracting all of each Fund's liabilities, and dividing the result
by the total number of shares outstanding at such time. Net asset value is
determined separately for each class of shares of each Fund.
Equity securities held by the Theme Portfolios are valued at the last sale price
on the exchange 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. 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 and
market fluctuations, provided 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 the
direction of the Company's Board of Directors or the Portfolios' Board of
Trustees, as applicable. Securities quoted in foreign currencies will be valued
in U.S. dollars based on the prevailing exchange rates on that day.
Certain of the Theme Portfolios' securities from time to time may be listed
primarily on foreign exchanges which trade on days when the NYSE is closed (such
as a Saturday). As a result, the net asset value of a Fund's shares may be
significantly affected by such trading on days when shareholders have no access
to that Fund.
- --------------------------------------------------------------------------------
DIVIDENDS, OTHER DISTRIBUTIONS
AND FEDERAL INCOME TAXATION
- --------------------------------------------------------------------------------
DIVIDENDS AND OTHER DISTRIBUTIONS. Each Fund annually declares as a dividend all
of 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 its 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
Prospectus Page 35
<PAGE>
G.T. GLOBAL THEME FUNDS
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 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 AUTOMATICALLY
REINVESTED 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 qualify or continue to qualify for treatment as a
regulated investment company under the Code. In each taxable year that a Fund so
qualifies, that 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. Each Portfolio expects that it also will not be
liable for any federal income tax.
Dividends from a Fund's investment company taxable income (whether paid in cash
or reinvested in additional shares) are taxable to its shareholders as ordinary
income to the extent of the Fund's earnings and profits. Distributions of a
Fund's net capital gain, when designated as such, are taxable to its
shareholders as long-term capital gains, regardless of how long they have held
their Fund shares and whether paid in cash or reinvested in additional shares.
Each Fund provides federal tax information to its shareholders annually,
including information about dividends and other distributions paid during the
preceding year and, under certain circumstances, the shareholders' respective
shares of any foreign taxes treated as 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
Prospectus Page 36
<PAGE>
G.T. GLOBAL THEME FUNDS
affecting the Funds and their shareholders. See "Taxes" in the Statement of
Additional Information for a further discussion. There may be other federal,
state, local or foreign tax considerations applicable to a particular investor.
Prospective investors therefore are urged to consult their tax advisers.
- --------------------------------------------------------------------------------
MANAGEMENT
- --------------------------------------------------------------------------------
The Company's Board of Directors has overall responsibility for the operation of
each Fund. Pursuant to such responsibility, the Board has approved contracts
with various financial organizations to provide certain services required by
each Fund. The Portfolios' Board of Trustees has overall responsibility for
operation of each Portfolio. See "Directors, Trustees, and Executive Officers"
in the Statement of Additional Information for a complete description of the
Directors of the Funds and the Trustees of the Portfolios. A majority of the
disinterested members (as defined in the 1940 Act) of the Board of Directors of
the Company and the Board of Trustees of the Portfolios have adopted written
procedures reasonably appropriate to deal with potential conflicts of interest
arising concerning the Funds and their corresponding Portfolios up to and
including creating a separate Board of Trustees of the Portfolios.
INVESTMENT MANAGEMENT AND ADMINISTRATION. Services provided by G.T. Capital as
the Theme Portfolios' investment manager and administrator include, but are not
limited to, determining the composition of the investment portfolio of the
Portfolios and placing orders to buy, sell or hold particular securities. In
addition, G.T. Capital provides the following administration services to the
Portfolios and the Funds: furnishing corporate officers and clerical staff;
providing office space, services and equipment; and supervising all matters
relating to the Portfolios' and the Funds' operation.
The Financial Services Fund, Infrastructure Fund, Natural Resources Fund and
Consumer Products and Services Fund each pays administration fees directly to
G.T. Capital at the annualized rate of 0.25% of such Fund's average daily net
assets. In addition, each such Fund bears its pro rata portion of the investment
management and administration fees paid by its corresponding Portfolio to G.T.
Capital. The Financial Services Portfolio, Infrastructure Portfolio, Natural
Resources Portfolio and Consumer Products and Services Portfolio each pays such
fees, based on the average daily net assets of such Portfolio, directly to G.T.
Capital at the annualized rate of .725% on the first $500 million, .70% on the
next $500 million, .675% on the next $500 million and .65% on all amounts
thereafter. For investment management and administration services provided to
the Health Care Fund and Telecommunications Fund, each such Fund pays G.T.
Capital a fee computed daily and paid monthly based on each such Fund's 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
administrative 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, CA 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.
In addition to the San Francisco office, the G.T. Group maintains 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
Prospectus Page 37
<PAGE>
G.T. GLOBAL THEME FUNDS
have the advantage of being close to the financial markets they follow. 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.
In managing the Theme Portfolios, 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 Portfolio's investment objective. The investment
professionals primarily responsible for the portfolio management of the Theme
Portfolios are as follows:
GLOBAL FINANCIAL SERVICES PORTFOLIO
<TABLE>
<CAPTION>
RESPONSIBILITIES FOR BUSINESS EXPERIENCE
NAME/OFFICE THE PORTFOLIO PAST FIVE YEARS
- -------------------------------------- -------------------------------------- --------------------------------------
<S> <C> <C>
Edward R. Gomoll Portfolio manager since its inception Portfolio Manager for G.T. Capital
San Francisco in 1994
A. James Ellman Research analyst since 1994 Analyst for G.T. Capital since 1994.
San Francisco From 1992 to 1994, Mr. Ellman was a
student at the Harvard Graduate
School of Business Administration,
where he received a Master of
Business Administration. From 1990 to
1992, Mr. Ellman was employed by the
Federal Reserve Bank of New York as
an international bank examiner. Prior
thereto, he was a student at Tufts
University, where he received a
Bachelor's Degree in Economics and
History.
</TABLE>
Prospectus Page 38
<PAGE>
G.T. GLOBAL THEME FUNDS
GLOBAL INFRASTRUCTURE PORTFOLIO
<TABLE>
<CAPTION>
RESPONSIBILITIES FOR BUSINESS EXPERIENCE
NAME/OFFICE THE PORTFOLIO PAST FIVE YEARS
- -------------------------------------- -------------------------------------- --------------------------------------
<S> <C> <C>
David L. Sherry Co-Portfolio manager since its Investment Analyst for G.T. Capital
San Francisco inception in 1994 since 1993. From 1992 to 1993, Mr.
Sherry was Senior Securities Analyst
for Franklin Resources, Inc. (San
Mateo, CA). From 1990 to 1992, he was
a student at University of California
at Los Angeles Graduate School of
Business (where he received a Master
of Business Administration.) Prior
thereto, he was an Assistant
Treasurer with Brown Brothers
Harriman (NY).
Michael Mahoney Co-Portfolio manager since its Portfolio Manager for G.T. Capital
San Francisco inception in 1994 since 1993. From 1991 to 1993, Mr.
Mahoney was an Investment Analyst for
G.T. Capital. From 1989 to 1991, he
was a student at Stanford Graduate
School of Business (where he received
a Master of Business Administration).
Prior thereto, he was a Management
Consultant for Bain & Co., management
consulting (Boston).
</TABLE>
GLOBAL NATURAL RESOURCES PORTFOLIO
<TABLE>
<CAPTION>
RESPONSIBILITIES FOR BUSINESS EXPERIENCE
NAME/OFFICE THE PORTFOLIO PAST FIVE YEARS
- -------------------------------------- -------------------------------------- --------------------------------------
<S> <C> <C>
Charles A. Wall Portfolio manager since its inception Portfolio Manager for G.T. Management
Sydney in 1994 (Australia) Ltd. since 1992. Prior
thereto, Mr. Wall was a Portfolio
Manager for Baring Securities
(Sydney).
Derek H. Webb Assistant portfolio manager Analyst for G.T. Capital Management,
San Francisco since its inception in 1994 Inc. since 1992. From 1990 to 1992,
Mr. Webb was a student of the
University of Pennsylvania, Wharton
School of Business. During 1989, he
was Vice President, Citicorp
Investment Bank for Los Angeles.
Prior thereto, he was a Bond Trader,
Trust Co. of the West (Los Angeles).
</TABLE>
Prospectus Page 39
<PAGE>
G.T. GLOBAL THEME FUNDS
GLOBAL CONSUMER PRODUCTS AND SERVICES PORTFOLIO
<TABLE>
<CAPTION>
RESPONSIBILITIES FOR BUSINESS EXPERIENCE
NAME/OFFICE THE PORTFOLIO PAST FIVE YEARS
- -------------------------------------- -------------------------------------- --------------------------------------
<S> <C> <C>
Derek H. Webb Portfolio manager since its inception Analyst for G.T. Capital Management,
San Francisco in 1994 Inc. since 1992. From 1990 to 1992,
Mr. Webb was a student of the
University of Pennsylvania, Wharton
School of Business. During 1989, he
was Vice President, Citicorp
Investment Bank for Los Angeles.
Prior thereto, he was a Bond Trader,
Trust Co. of the West (Los Angeles).
John D. Nadell Assistant Portfolio manager since its Investment Analyst for G.T. Capital
San Francisco inception in 1994 Management, Inc. since May, 1994.
From 1990 to 1994, Mr. Nadell was an
Analyst for Pacific Equity Management
(Oakland, CA). Prior thereto, he was
an Associate Consultant of Bain &
Co., a management consultant
(Boston).
GLOBAL HEALTH CARE FUND
<CAPTION>
RESPONSIBILITIES FOR BUSINESS EXPERIENCE
NAME/OFFICE THE FUND PAST FIVE YEARS
- -------------------------------------- -------------------------------------- --------------------------------------
<S> <C> <C>
Edward R. Gomoll Portfolio manager since Fund inception Portfolio Manager for G.T. Capital
San Francisco in 1989
Michael Yellen Research analyst since 1994 Analyst for G.T. Capital since June
San Francisco 1994. From 1991 to 1994, Mr. Yellen
was a securities analyst and
co-portfolio manager for Franklin
Resources, Inc. (San Mateo, CA).
Prior thereto, Mr. Yellen was a
student at Stanford University, where
he received a Bachelor's Degree in
International Relations.
</TABLE>
Prospectus Page 40
<PAGE>
G.T. GLOBAL THEME FUNDS
GLOBAL TELECOMMUNICATIONS FUND
<TABLE>
<CAPTION>
RESPONSIBILITIES FOR BUSINESS EXPERIENCE
NAME/OFFICE THE FUND PAST FIVE YEARS
- -------------------------------------- -------------------------------------- --------------------------------------
<S> <C> <C>
Michael Mahoney Portfolio manager since 1993 Portfolio Manager for G.T. Capital
San Francisco since 1993. From 1991 to 1993, Mr.
Mahoney was an Investment Analyst for
G.T. Capital. From 1989 to 1991, he
was a student at Stanford Graduate
School of Business (where he received
a Master of Business Administration).
Prior thereto, he was a Management
Consultant for Bain & Co., management
consulting (Boston).
David L. Sherry Assistant portfolio manager since 1993 Investment Analyst for G.T. Capital
San Francisco since 1993. From 1992 to 1993, Mr.
Sherry was Senior Securities Analyst
for Franklin Resources, Inc. (San
Mateo, CA). From 1990 to 1992, he was
a student at University of California
at Los Angeles Graduate School of
Business (where he received a Master
of Business Administration). Prior
thereto, he was an Assistant
Treasurer with Brown Brothers
Harriman (NY).
</TABLE>
Prospectus Page 41
<PAGE>
G.T. GLOBAL THEME FUNDS
In addition, in managing the Theme Portfolios these individuals utilize the
research and related work of other members of G.T. Capital's investment staff.
In placing orders for the Theme Portfolios' securities 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 and over-the-counter ("OTC") markets often are
fixed and generally are higher than those in U.S. securities exchanges or
markets. Debt securities generally are traded on a "net" basis with a dealer
acting as principal for its own account without a stated commission, although
the price of the security usually includes a profit to the dealer. U.S. and
foreign government securities and money market instruments generally are traded
in the OTC markets. In underwritten offerings, securities usually are purchased
at a fixed price which includes an amount of compensation to the underwriter. On
occasion, securities may be purchased directly from an issuer, in which case no
commissions or discounts are paid. Broker/dealers may receive commissions on
futures, currency and options transactions. Consistent with its obligation to
obtain 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 for the Theme
Portfolios may be executed through any of the BIL G.T. Group affiliates.
G.T. Capital anticipates that the annual turnover rate of each Theme Portfolio
will not exceed 100%. However, G.T. Capital does not regard portfolio turnover
as a limiting factor and will buy or sell securities for each Theme Portfolio as
necessary in response to market conditions to meet each Theme Portfolio's
objective of long-term growth of capital. The portfolio turnover rate is
calculated by dividing the lesser of sales or purchases of portfolio securities
by each Theme Portfolio'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 the Theme Portfolios will bear directly, and may result in
the realization of net capital gains, which are taxable when distributed to each
Fund's shareholders.
DISTRIBUTION OF FUND SHARES. G.T. Global is the distributor, or principal
underwriter, of the Funds' 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, CA 94111.
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 broker/dealers that have sold or may sell significant amounts
of shares during specified periods of time. Such compensation and incentives may
include, but are not limited to, cash, merchandise, trips and financial
assistance to 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. If a bank were prohibited from so acting, its shareholder
clients would be permitted to remain shareholders, and alternative means for
continuing the servicing of such shareholders would be sought. It is not
expected that shareholders would suffer any adverse financial consequences as a
result of any of these occurrences.
Prospectus Page 42
<PAGE>
G.T. GLOBAL THEME FUNDS
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 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 each Fund's fiscal year on October 31 and fiscal half-year on April
30 of each year, shareholders receive an annual and semiannual report,
respectively. These reports list the securities held by each Fund and contain
each Fund's financial statements. In addition, the federal income status of
distributions made by a Fund 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 and is registered with the SEC as an open-end management investment
company. 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 each Fund are entitled to one vote per share
(with proportional voting for fractional shares) and are freely transferable.
Shareholders have no preemptive or conversion rights.
On any matter submitted to a vote of shareholders, shares of a Fund will be
voted by a Fund's shareholders individually when the matter affects the specific
interest of that Fund only, such as approval of its 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 each Fund and 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 selection by the Board of
Directors of the Company's independent accountants.
Normally there will be no annual meeting of shareholders in any year, except as
required under the 1940 Act. Each Fund 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
each Fund and of the Company's other 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 shares 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 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 2.40% for
Financial Services Fund, 2.40% for Infrastructure Fund, 2.40% for Natural
Resources Fund, 1.98% for Health Care Fund, 1.80% for Telecommunications Fund,
and 2.28% for Consumer Products and Services 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
Prospectus Page 43
<PAGE>
G.T. GLOBAL THEME FUNDS
shares were 2.90% for Financial Services Fund, 2.90% for Infrastructure Fund,
2.90% for Natural Resources Fund, 2.48% for Health Care Fund, and 2.30% for
Telecommunications 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 Class B shares.
Pursuant to the Company's Articles of Incorporation, it may issue six billion
shares. Of this number, 300 million shares have been classified as shares of
each Fund, 100 million shares as Class A shares and 100 million shares as Class
B shares, except for the Telecommunications Fund, of which 200 million shares
have each been classified as Class A shares and Class B shares, respectively.
100 million shares have been classified as Advisor Class shares for each Fund.
These amounts may be increased from time to time in the discretion of the Board
of Directors. Each share of each Fund represents an interest in that Fund only,
has a par value of $0.0001 per share, represents an equal proportionate interest
in that Fund with other shares of that Fund and is entitled to such dividends
and other distributions out of the income earned and gain realized on the assets
belonging to that Fund as may be declared at the discretion of the Board of
Directors. Each Class A, Class B and Advisor Class share of each 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 each Fund when issued are fully paid and nonassessable.
ORGANIZATION OF THE PORTFOLIOS. Each Portfolio is organized as a subtrust of a
New York common law trust. The Declaration of Trust provides that the Financial
Services Fund, Infrastructure Fund, Natural Resources Fund and Consumer Products
and Services Fund and other entities investing in its corresponding Portfolio
(E.G., other investment companies, insurance company separate accounts and
common and commingled trust funds), if any, each will be liable for all
obligations of that Portfolio. However, the Directors of the Company believe
that the risk of such Funds' incurring financial loss because of such liability
is limited to circumstances in which both inadequate insurance existed and each
of the Portfolios itself was unable to meet its obligations, and that neither
the Financial Services Fund, Infrastructure Fund, Natural Resources Fund and
Consumer Products and Services Fund nor their shareholders will be exposed to a
material risk of liability by reason of the Funds' investing in their
corresponding Portfolios.
Whenever the Financial Services Fund, Infrastructure Fund, Natural Resources
Fund and Consumer Products and Services Fund is requested to vote on any
proposal of its corresponding Portfolio, such Fund will hold a meeting of such
Fund's shareholders and will cast its vote as instructed by its shareholders. As
is true for many investment companies, a majority of the outstanding voting
securities can control the results of certain shareholder votes. Because a
Portfolio investors' votes are proportionate to their percentage interests in
that Portfolio, one or more other Portfolio investors could, in certain
instances, approve an action against which a majority of the outstanding voting
securities of its corresponding Fund had voted. This could result in that Fund's
redeeming its investment in its corresponding Portfolio, which could result in
increased expenses for that Fund. Whenever the shareholders of the Financial
Services Fund, Infrastructure Fund, Natural Resources Fund and Consumer Products
and Services Fund are called to vote on matters related to its corresponding
Portfolio, the Directors of the Company shall vote shares for which they receive
no voting instructions in the same proportion as the shares for which they do
receive voting instructions. Any information received from the Financial
Services Portfolio, Infrastructure Portfolio, Natural Resources Portfolio and
Consumer Products and Services Portfolio in the Portfolio's report to
shareholders will be provided to the shareholders of its corresponding Fund.
Each investor in a Portfolio, including its corresponding Fund, may add to or
reduce its investment in that Portfolio on each day the NYSE is open for
trading. As of the close of regular trading on the NYSE on each such day, the
value of each such investor's beneficial interest in that Portfolio will be
determined by multiplying the net asset value
Prospectus Page 44
<PAGE>
G.T. GLOBAL THEME FUNDS
of that Portfolio by the percentage, effective for that day, which represents
that investor's share of the aggregate beneficial interests in that Portfolio.
Any additions or reductions, which are to be effected as of the close of the
regular trading on the NYSE, on such day, will then be effected. The investor's
percentage of the aggregate beneficial interests in that Portfolio will then be
recomputed as the percentage equal to the fraction (i) the numerator of which is
the value of such investor's investment in that Portfolio as of the close of
regular trading on the NYSE, on such day plus or minus, as the case may be, the
amount of net additions to or reductions from the investor's investment in that
Portfolio effected as of that time, and (ii) the denominator of which is the
aggregate net asset value of that Portfolio as of that time, on such day, plus
or minus, as the case may be, the amount of net additions to or reductions from
the aggregate investments in that Portfolio by all investors in that Portfolio.
The percentage so determined will then be applied to determine the value of the
investor's interest in that Portfolio as of the close of regular trading on the
NYSE, on the following day the NYSE is open for trading.
Each Fund, except the Health Care Fund, is classified as a "diversified" fund
under the 1940 Act, which means that, with respect to 75% of the Fund's total
assets: (i) no more than 5% will be invested in the securities of any one
issuer, and (ii) each Fund will purchase no more than 10% of the outstanding
voting securities of any one issuer. The Health Care Fund is a "non-diversified"
investment company under the 1940 Act, which means that, with respect to 50% of
the Fund's total assets, no more than 5% may be invested in the securities of a
single issuer.
SHAREHOLDER INQUIRIES. Shareholder inquiries may be made by calling the Funds
toll-free at (800) 223-2138 or by writing to the Fund at P.O. Box 7893, San
Francisco, CA 94120-7893.
PERFORMANCE INFORMATION. The Funds, from time to time, may include information
on their 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, the Funds may quote their 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 a
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 a
Fund. Standardized Return assumes the reinvestment of all dividends and other
distributions at net asset value on the reinvestment date as established by the
Board of Directors.
In addition, in order to more completely represent the Funds' performance or
more accurately compare such performance to other measures of investment return,
the Funds 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) and
assumes reinvestment of all dividends and other distributions. Non-Standardized
Return may be quoted for the same or different periods as those for which
Standardized Return is quoted; it may consist of an aggregate or average annual
percentage rate of return, actual year-by-year rates or any combination thereof.
Non-Standardized Return may or may not take sales charges into account;
performance data calculated without taking the effect of sales charges into
account will be higher than data including the effect of such charges.
The Funds' performance data will reflect past performance and will not
necessarily be indicative of future results. The Funds' 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 the Fund's investment
results with those published for other investment companies, other investment
vehicles and unmanaged indices. The Funds' results also should be considered
relative to the risks associated with its investment objective and policies. The
Funds will include performance data for all classes of shares of the Funds in
any advertisement or information including performance data for the Funds. See
"Investment Results" in the Statement of Additional Information.
Each Fund's annual report contains additional information with respect to its
performance. The annual
Prospectus Page 45
<PAGE>
G.T. GLOBAL THEME FUNDS
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, a subsidiary of
BIL GT Group and maintains offices at 50 California Street, 27th Floor, San
Francisco, CA 94111.
CUSTODIAN AND ACCOUNTING AGENT. State Street Bank and Trust Company, 225
Franklin Street, Boston, Massachusetts 02110, is custodian of the assets of the
Portfolios, Health Care Fund and Telecommunications Fund and serves as each
Fund's and each Portfolio'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 to the Theme
Portfolios. Kirkpatrick & Lockhart LLP also acts as counsel to G.T. Capital,
G.T. Global and G.T. Services in connection with other matters.
INDEPENDENT ACCOUNTANTS. The Theme Portfolios' independent accountants are
Coopers & Lybrand L.L.P., One Post Office Square, Boston, Massachusetts 02109.
Coopers & Lybrand L.L.P. conducts an annual audit of the Funds and Portfolios,
assists in the preparation of the Funds' and Portfolios' federal and state
income tax returns and consults with the Company and the Funds and the
Portfolios 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 46
<PAGE>
G.T. GLOBAL THEME FUNDS
NOTES
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Prospectus Page 47
<PAGE>
G.T. GLOBAL THEME FUNDS
NOTES
- --------------------------------------------------------------------------------
Prospectus Page 48
<PAGE>
G.T. GLOBAL THEME FUNDS
NOTES
- --------------------------------------------------------------------------------
Prospectus Page 49
<PAGE>
G.T. GLOBAL THEME FUNDS
[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 G.T. GLOBAL OR YOUR FINANCIAL ADVISOR.
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. INVESTMENT FUNDS, INC., G.T. GLOBAL
FINANCIAL SERVICES FUND, INC., GLOBAL FINANCIAL SERVICES PORTFOLIO, G.T.
GLOBAL INFRASTRUCTURE FUND, GLOBAL INFRASTRUCTURE PORTFOLIO, G.T. GLOBAL
NATURAL RESOURCES FUND, GLOBAL NATURAL RESOURCES PORTFOLIO, G.T. GLOBAL
CONSUMER PRODUCTS AND SERVICES FUND, GLOBAL CONSUMER PRODUCTS AND SERVICES
PORTFOLIO, G.T. GLOBAL HEALTH CARE FUND, G.T. GLOBAL TELECOMMUNICATIONS
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 IN SUCH JURISDICTION TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER.
THEPV506040MC
<PAGE>
[LOGO]
G.T. GLOBAL THEME FUNDS
50 California Street, 27th Floor
San Francisco, California 94111
(415) 392-6181
Toll Free: (800) 824-1580
Statement of Additional Information
March 1, 1995
As Revised June 30, 1995
- --------------------------------------------------------------------------------
This Statement of Additional Information relates to the Class A and Class B
shares of G.T. Global Financial Services Fund ("Financial Services Fund"), G.T.
Global Infrastructure Fund ("Infrastructure Fund"), G.T. Global Natural
Resources Fund ("Natural Resources Fund"), G.T. Global Consumer Products and
Services Fund ("Consumer Products and Services Fund"), G.T. Global Health Care
Fund ("Health Care Fund") and G.T. Global Telecommunications Fund
("Telecommunications Fund") (individually, "Fund" or "Theme Fund," collectively,
"Funds" or "Theme Funds"). Each Fund (except for Health Care Fund) is a
diversified series of G.T. Investment Funds, Inc. ("Company"), a registered
open-end management investment company. The Health Care Fund is organized as a
non-diversified series of the Company. The Financial Services Fund,
Infrastructure Fund, Natural Resources Fund and Consumer Products and Services
Fund (individually, "Feeder Fund," collectively, "Feeder Funds") invest all of
their investable assets in the Global Financial Services Portfolio, Global
Infrastructure Portfolio, Global Natural Resources Portfolio and Global Consumer
Products and Services Portfolio (individually, "Portfolio," collectively,
"Portfolios"), respectively. This Statement of Additional Information, which is
not a prospectus, supplements and should be read in conjunction with the G.T.
Global Theme Funds' current Class A and Class B Prospectus dated March 1, 1995,
a copy of which is available without charge by writing to the above address or
calling the Funds at the toll-free telephone number printed above.
G.T. Capital Management, Inc. ("G.T. Capital") serves as the investment manager
of and administrator for the Health Care Fund, Telecommunications Fund and the
Portfolios (each a "Theme Portfolio"), and also serves as the administrator for
each Feeder Fund. The principal underwriter and distributor of the Funds' shares
is G.T. Global Financial Services, Inc. ("G.T. Global"). The Funds' 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................................................................................. 6
Risk Factors............................................................................................................. 14
Investment Limitations................................................................................................... 17
Execution of Portfolio Transactions...................................................................................... 22
Directors and Executive Officers......................................................................................... 24
Management............................................................................................................... 26
Valuation of Fund Shares................................................................................................. 31
Information Relating to Sales and Redemptions............................................................................ 32
Taxes.................................................................................................................... 35
Additional Information................................................................................................... 38
Investment Results....................................................................................................... 39
Description of Debt Ratings.............................................................................................. 70
Financial Statements..................................................................................................... 72
</TABLE>
Statement of Additional Information Page 1
<PAGE>
G.T. GLOBAL THEME FUNDS
INVESTMENT OBJECTIVE
AND POLICIES
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVE
The investment objective of each Feeder Fund is long-term capital growth. The
investment objective of the G.T. Global Health Care Fund and Telecommunications
Fund is long-term capital appreciation and long-term growth of capital,
respectively.
The Financial Services Fund, Infrastructure Fund, Natural Resources Fund and
Consumer Products and Services Fund each seeks to achieve its investment
objective by investing all of its investable assets in the Financial Services
Portfolio, Infrastructure Portfolio, Natural Resources Portfolio and Consumer
Products and Services Portfolio, respectively, each of which is a subtrust (a
"series") of Global Investment Portfolio (an open-end management investment
company) with an investment objective that is identical to that of its
corresponding Fund. Whenever the phrase "all of the Funds' investable assets" is
used herein and in the Prospectus, it means that the only investment securities
that will be held by a Feeder Fund will be that Fund's interest in its
corresponding Portfolio. A Feeder Fund may withdraw its investment in its
corresponding Portfolio at any time, if the Board of Directors of the Company
determines that it is in the best interests of such Fund and its shareholders to
do so. Upon any such withdrawal, a Feeder Fund's assets would be invested in
accordance with the investment policies described below and in the Prospectus
with respect to its corresponding Portfolio.
In analyzing the natural resource industry, G.T. Capital has identified four
areas that it expects will create investment opportunities: (i) improving
supply/demand fundamentals, which may result in higher commodity prices; (ii)
privatization of state-owned natural resource businesses; (iii) management which
can improve production efficiencies without correspondingly increasing commodity
prices; and (iv) service companies with emerging technologies that can enhance
productivity or reduce production costs. Of course, there is no certainty that
these factors will produce the anticipated results.
In analyzing the telecommunications industry, G.T. Capital has identified four
areas that it expects will create investment opportunities: (i) deregulation of
companies in the industry, which will allow competition to promote greater
efficiencies; (ii) privatization of state-owned telecommunications businesses;
(iii) development of infrastructure in underdeveloped countries and upgrading of
services in other countries; and (iv) emerging technologies that will enhance
productivity and reduce costs in the telecommunications industry. Of course,
there is no certainty that these factors will produce the anticipated results.
There may be times when, in the opinion of G.T. Capital, prevailing market,
economic or political conditions warrant reducing the proportion of the Theme
Portfolios' assets invested in equity securities and increasing the proportion
held in cash (U.S. dollars, foreign currencies or multinational currency units)
or invested in debt securities or high quality money market instruments issued
by corporations, or the United States, or a foreign government. A portion of
each Theme Portfolio's assets normally will be held in cash (U.S. dollars,
foreign currencies or multinational currency units) or invested in foreign or
domestic high quality money market instruments pending investment of proceeds
from new sales of Fund shares to provide for ongoing expenses and redemptions.
SELECTION OF EQUITY INVESTMENTS
For each Theme Portfolio's investment purposes, an issuer is typically
considered as located in a particular country if it is incorporated under the
laws of that country, at least 50% of the value of its assets are located in
that country and it normally derives at least 50% of its income from operations
or sales in that country. However, these are not absolute requirements, and
certain companies incorporated in a particular country and considered by G.T.
Capital to be located in that country may have substantial foreign operations or
subsidiaries and/or export sales exceeding in size the assets or sales in that
country.
In certain countries, governmental restrictions and other limitations on
investment may affect a Theme Portfolio's ability to invest in such countries.
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. G.T. Capital is not
aware at this time of the existence of any investment or exchange control
regulations which might substantially impair the operations of the Theme
Portfolios as described in the Prospectus and this Statement of
Statement of Additional Information Page 2
<PAGE>
G.T. GLOBAL THEME FUNDS
Additional Information. Restrictions may in the future, however, make it
undesirable to invest in certain countries. It should be noted, however, that
this situation could change at any time. None of the Theme Portfolios has a
present intention of making any significant investment in any country or stock
market where the political or economic situation might be considered by G.T.
Capital to threaten a Theme Portfolio with substantial or total loss of its
investment in such country or market.
INVESTMENTS IN OTHER INVESTMENT COMPANIES
Each Theme Portfolio may invest in the securities of investment companies within
the limits of the 1940 Act. These limitations currently provide that, in
general, a Theme Portfolio may purchase shares of an investment company unless
(a) such a purchase would cause a Theme Portfolio to own in the aggregate more
than 3% of the total outstanding voting stock of the investment company or (b)
such a purchase would cause the Theme Portfolio to have more than 5% of its
assets invested in the investment company or more than 10% of its assets
invested in an aggregate of all such investment companies. The foregoing
restrictions do not apply to the investment of the Financial Services Fund,
Infrastructure Fund, Natural Resources Fund and Consumer Products and Services
Fund in their corresponding Portfolios. Investment in closed-end investment
companies may also involve the payment of substantial premiums above the value
of such companies' portfolio securities. Each Theme Portfolio does not intend to
invest in such investment companies 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.
DEPOSITORY RECEIPTS
A Theme Portfolio 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 are typically 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 U.S. securities markets and EDRs
in bearer form are designed for use in European securities markets. For purposes
of each Theme Portfolio's investment policies, a Theme Portfolio's investments
in ADRs, ADSs and EDRs will be deemed to be investments in the equity securities
representing securities of foreign issuers into which they may be converted.
ADR facilities may be established as either "unsponsored" or "sponsored." While
ADRs issued under these two types of facilities are in some respects similar,
there are distinctions between them relating to the rights and obligations of
ADR holders and the practices of market participants. A depository may establish
an unsponsored facility without participation by (or even necessarily the
acquiescence of) the issuer of the deposited securities, although typically the
depository requests a letter of non-objection from such issuer prior to the
establishment of the facility. Holders of unsponsored ADRs generally bear all
the costs of such facilities. The depository usually charges fees upon the
deposit and withdrawal of the deposited securities, the conversion of dividends
into U.S. dollars, the disposition of non-cash distributions, and the
performance of other services. The depository of an unsponsored facility
frequently is under no obligation to distribute shareholder communications
received from the issuer of the deposited securities or to pass-through voting
rights to ADR holders 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
Theme Portfolios may invest in both sponsored and unsponsored ADRs.
WARRANTS OR RIGHTS
Warrants or rights may be acquired by a Theme Portfolio in connection with other
securities or separately and provide the Theme Portfolio with the right to
purchase at a later date other securities of the issuer. As a condition of
continued registration in a state, each Theme Portfolio 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 a Theme Portfolio in
units or attached to securities will be deemed to be without value for purposes
of this restriction.
Statement of Additional Information Page 3
<PAGE>
G.T. GLOBAL THEME FUNDS
LENDING OF PORTFOLIO SECURITIES
For the purpose of realizing additional income, each Theme Portfolio may make
secured loans of its securities holdings amounting to not more than 30% of its
total assets. Securities loans are made to broker/dealers or institutional
investors pursuant to agreements requiring that the loans 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 a
Theme Portfolio's investment policies and by regulatory agencies and approved by
the Portfolios' Board of Trustees or the Company's Board of Directors, as
applicable. The Theme Portfolios may pay reasonable administrative and custodial
fees in connection with the loans of their securities. While the securities loan
is outstanding, a Theme Portfolio 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. A Theme
Portfolio will have a right to call each loan and obtain the securities on five
business days' notice. A Theme Portfolio will not have the right to vote equity
securities while they are being lent, but it may 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 will only 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.
COMMERCIAL BANK OBLIGATIONS
For the purposes of each Theme Portfolio'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 investments in
non-U.S. securities in general, investments in the obligations of foreign
branches of U.S. banks and of foreign banks may subject each Theme Portfolio to
investment risks that are different in some respects from those of investments
in obligations of U.S. issuers. Although each Theme Portfolio will typically
acquire obligations issued and supported by the credit of U.S. or foreign banks
having total assets at the time of purchase of $1 billion or more, this $1
billion figure is not an investment policy or restriction of each Theme
Portfolio. For the purposes of calculation with respect to the $1 billion
figure, the assets of a bank will be deemed to include the assets of its U.S.
and non-U.S. branches.
REPURCHASE AGREEMENTS
Each Theme Portfolio will invest only in repurchase agreements collateralized at
all times in an amount at least equal to the repurchase price plus accrued
interest. To the extent that the proceeds from any sale of such collateral upon
a default in the obligation to repurchase were less than the repurchase price, a
Theme Portfolio 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 a Theme Portfolio's ability to sell the collateral and a Theme
Portfolio could suffer a loss. However, with respect to financial institutions
whose bankruptcy or liquidation proceedings are subject to the U.S. Bankruptcy
Code, each Theme Portfolio intends to comply with provisions under such Code
that would allow the immediate resale of such collateral. Each Theme Portfolio
will not enter into a repurchase agreement with a maturity of more than seven
days if, as a result, more than 15% of the value of its net assets (except for
Health Care Fund, which is more than 10% of the value of its total assets) would
be invested in such repurchase agreements and other illiquid investments.
BORROWING, REVERSE REPURCHASE AGREEMENTS AND "ROLL" TRANSACTIONS
Each Theme Portfolio's borrowings will not exceed 33 1/3% of its total assets,
i.e., the Theme Portfolio's total assets at all times will equal at least 300%
of the amount of outstanding borrowings. If market fluctuations in the value of
a Theme Portfolio's securities holdings or other factors cause the ratio of a
Theme Portfolio's total assets to outstanding borrowings to fall below 300%,
within three days (excluding Sundays and holidays) of such event that Theme
Portfolio may be required to sell portfolio securities to restore the 300% asset
coverage, even though from an investment standpoint such sales might be
disadvantageous. Each Theme Portfolio may also borrow up to 5% of its total
assets for temporary or emergency purposes other than to meet redemptions. Any
borrowing by a Theme Portfolio may cause greater fluctuation in the value of its
shares than would be the case if that Theme Portfolio did not borrow.
Each Theme Portfolio's fundamental investment limitations permit the Theme
Portfolio to borrow money for leveraging purposes. However, each Theme Portfolio
(except the Health Care Fund) is currently prohibited, pursuant to a non-
fundamental investment policy, from borrowing money in order to purchase
securities. Nevertheless, this policy may be changed in the future by the
Company's Board of Directors or the Portfolios' Board of Trustees, as
applicable. In the event that a Theme Portfolio employs leverage in the future,
it would be subject to certain additional risks. Use of leverage creates an
opportunity for greater growth of capital but would exaggerate any increases or
decreases in the net asset value
Statement of Additional Information Page 4
<PAGE>
G.T. GLOBAL THEME FUNDS
of the Financial Services Fund, Infrastructure Fund, Natural Resources Fund,
Consumer Products and Services Fund or a Theme Portfolio. When the income and
gains on securities purchased with the proceeds of borrowings exceed the costs
of such borrowings, a Theme Portfolio's earnings or a Fund's net asset value
will increase faster than otherwise would be the case; conversely, if such
income and gains fail to exceed such costs, a Theme Portfolio's earnings or a
Fund's net asset value would decline faster than would otherwise be the case.
Each Theme Portfolio may enter into reverse repurchase agreements, which involve
the sale of a security by a Theme Portfolio and its agreement to repurchase the
security at a specified time and price. Each Theme Portfolio may also engage in
"roll" transactions, which involve the sale of Government National Mortgage
Association ("GNMA") certificates or other securities together with a commitment
(for which the Theme Portfolio may receive a fee) to purchase similar, but not
identical, securities at a future date. Each Theme Portfolio 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.
SHORT SALES
Each Theme Portfolio (except the Health Care Fund) is authorized to make short
sales of securities. A short sale is a transaction in which a Theme Portfolio
sells a security in anticipation that the market price of that security will
decline. A Theme Portfolio may make short sales (i) as a form of hedging to
offset potential declines in long positions in securities it owns, or
anticipates acquiring, or in similar securities, and (ii) in order to maintain
flexibility in its securities holdings.
When a Theme Portfolio 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 Theme Portfolio 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.
A Theme Portfolio's obligation to replace the borrowed security when the
borrowing is called or expires will be secured by collateral (usually cash, U.S.
government securities or other liquid, high grade debt securities) deposited
with the intermediary. The Theme Portfolio 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 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 that Theme Portfolio on such
security, a Theme Portfolio 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 a Theme Portfolio replaces the borrowed security, that Theme
Portfolio will incur a loss; conversely, if the price declines, the Theme
Portfolio will realize a gain. Any gain will be decreased, and any loss
increased, by the transaction costs associated with the transaction. Although a
Theme Portfolio's gain is limited by the price at which it sold the security
short, its potential loss theoretically is unlimited.
No Theme Portfolio will 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 Theme Portfolio's aggregate short sales of the securities of
any one issuer exceed the lesser of 2% of the Theme Portfolio's net assets or 2%
of the securities of any class of the issuer. Moreover, a Theme Portfolio may
engage in short sales only with respect to securities listed on a national
securities exchange. A Theme Portfolio 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 Theme Portfolio owns the security it has sold short or has the
immediate and unconditional right to acquire at no additional cost the identical
security.
Statement of Additional Information Page 5
<PAGE>
G.T. GLOBAL THEME FUNDS
OPTIONS, FUTURES AND CURRENCY
STRATEGIES
- --------------------------------------------------------------------------------
SPECIAL RISKS OF OPTIONS, FUTURES AND CURRENCY STRATEGIES
The use of options, futures contracts and forward currency contracts ("Forward
Contracts") involves special considerations and risks, as described below. Risks
pertaining to particular instruments are described in the sections that follow.
(1) Successful use of most of these instruments depends upon 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.
(2) There might be imperfect correlation, or even no correlation,
between price movements of an instrument and price movements of the
investments being hedged. For example, if the value of an instrument used in
a short hedge increased by less than the decline in value of the hedged
investment, the hedge would not be fully successful. Such a lack of
correlation might occur due to factors unrelated to the value of the
investments being hedged, such as speculative or other pressures on the
markets in which the hedging instrument is traded. The effectiveness of
hedges using hedging instruments on indices will depend on the degree of
correlation between price movements in the index and price movements in the
investments being hedged.
(3) Hedging strategies, if successful, can reduce risk of loss by wholly
or partially offsetting the negative effect of unfavorable price movements
in the investments being hedged. However, hedging strategies can also reduce
opportunity for gain by offsetting the positive effect of favorable price
movements in the hedged investments. For example, if a Theme Portfolio
entered into a short hedge because G.T. Capital projected a decline in the
price of a security in the Theme Portfolio'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 Theme Portfolio could suffer a
loss. In either such case, the Theme Portfolio would have been in a better
position had it not hedged at all.
(4) As described below, the Theme Portfolio might be required to
maintain assets as "cover," maintain segregated accounts or make margin
payments when it takes positions in instruments involving obligations to
third parties (I.E., instruments other than purchased options). If the Theme
Portfolio were unable to close out its positions in such instruments, it
might be required to continue to maintain such assets or accounts or make
such payments until the position expired or matured. The requirements might
impair the Theme Portfolio's ability to sell a portfolio security or make an
investment at a time when it would otherwise be favorable to do so, or
require that the Theme Portfolio sell a portfolio security at a
disadvantageous time. The Theme Portfolio's ability to close out a position
in an instrument prior to expiration or maturity depends on the existence of
a liquid secondary market or, in the absence of such a market, the ability
and willingness of the other party to the transaction ("contra party") to
enter into a transaction closing out the position. Therefore, there is no
assurance that any position can be closed out at a time and price that is
favorable to the Theme Portfolio.
WRITING CALL OPTIONS
Each Theme Portfolio 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 Theme Portfolios' 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 Theme Portfolios.
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 or she may be
assigned an exercise notice, requiring him or her 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.
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G.T. GLOBAL THEME FUNDS
Portfolio securities or currencies on which call options may be written will be
purchased solely on the basis of investment considerations consistent with each
Theme Portfolio's investment objective. When writing a call option, a Theme
Portfolio, 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,
a Theme Portfolio has no control over when it may be required to sell the
underlying securities or currencies, since most options may be exercised at any
time prior to the option's expiration. If a call option that a Theme Portfolio
has written expires, the Theme Portfolio will realize a gain in the amount of
the premium; however, such gain may be offset by a decline in the market value
of the underlying security or currency during the option period. If the call
option is exercised, the Theme Portfolio 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. Each Theme Portfolio does not consider a security or
currency covered by a call option to be "pledged" as that term is used in that
Theme Portfolio's policy that limits the pledging or mortgaging of its assets.
Writing call options can serve as a limited short hedge because declines in the
value of the hedged investment would be offset to the extent of the premium
received for writing the option. However, if the security or currency
appreciates to a price higher than the exercise price of the call option, it can
be expected that the option will be exercised and a Theme Portfolio will be
obligated to sell the security or currency at less than its market value.
The premium that a Theme Portfolio receives for writing a call option is deemed
to constitute the market value of an option. The premium the Theme Portfolio
will receive from writing a call option will reflect, among other things, the
current market price of the underlying investment, the relationship of the
exercise price to such market price, the historical price volatility of the
underlying investment, and the length of the option period. In determining
whether a particular call option should be written, 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 a Theme Portfolio to
write another call option on the underlying security or currency with either a
different exercise price or expiration date, or both.
Each Theme Portfolio will pay transaction costs in connection with the writing
of options and in entering into closing purchase contracts. Transaction costs
relating to options activity 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, a Theme Portfolio may purchase an underlying
security or currency for delivery in accordance with the exercise of an option,
rather than delivering such security or currency from its portfolio. In such
cases, additional costs will be incurred.
A Theme Portfolio will realize a profit or loss from a closing purchase
transaction if the cost of the transaction is less or more, respectively, than
the premium received from writing the option. Because increases in the market
price of a call option generally will reflect increases in the market price of
the underlying security 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 a Theme Portfolio.
WRITING PUT OPTIONS
Each Theme Portfolio may write put options on securities, indices and
currencies. A put option gives the purchaser of the option the right to sell,
and the writer (seller) the obligation to buy, the underlying security or
currency at the exercise price at any time until (American style) or on
(European style) the expiration date. The operation of put options in other
respects, including their related risks and rewards, is substantially identical
to that of call options.
A Theme Portfolio generally would write put options in circumstances where G.T.
Capital wishes to purchase the underlying security or currency for a Theme
Portfolio's holdings at a price lower than the current market price of the
security or currency. In such event, a Theme Portfolio would write a put option
at an exercise price that, reduced by the premium received on the option,
reflects the lower price it is willing to pay. Since the Theme Portfolio 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.
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G.T. GLOBAL THEME FUNDS
Writing put options can serve as a limited long hedge because increases in the
value of the hedged investment would be offset to the extent of the premium
received for writing the option. However, if the security or currency
depreciates to a price lower than the exercise price of the put option, it can
be expected that the put option will be exercised and a Theme Portfolio will be
obligated to sell the security or currency at less than its market value.
PURCHASING PUT OPTIONS
Each Theme Portfolio may purchase put options on securities, indices and
currencies. As the holder of a put option, a Theme Portfolio would have the
right to sell the underlying security or currency at the exercise price at any
time until (American style) or on (European style) the expiration date. A Theme
Portfolio may enter into closing sale transactions with respect to such options,
exercise such option or permit such option to expire.
Each Theme Portfolio may purchase a put option on an underlying security or
currency ("protective put") owned by the Theme Portfolio 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
Theme Portfolio, 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.
A Theme Portfolio may also purchase put options at a time when it does not own
the underlying security or currency. By purchasing put options on a security or
currency it does not own, that Theme Portfolio 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 Theme Portfolio will lose its entire investment
in the put option. In order for the purchase of a put option to be profitable,
the market price of the underlying security or currency must decline
sufficiently below the exercise price to cover the premium and transaction
costs, unless the put option is sold in a closing sale transaction.
PURCHASING CALL OPTIONS
Each Theme Portfolio may purchase call options on securities, indices and
currencies. As the holder of a call option, the Theme Portfolio would have the
right to purchase the underlying security or currency at the exercise price at
any time until (American style) or on (European style) the expiration date. A
Theme Portfolio may enter into closing sale transactions with respect to such
options, exercise such options or permit such options to expire.
Call options may be purchased by a Theme Portfolio for the purpose of acquiring
the underlying security or currency for its portfolio. Utilized in this fashion,
the purchase of call options would enable a Theme Portfolio 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 a Theme Portfolio 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 Theme Portfolio 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.
A Theme Portfolio may also 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 Theme Portfolio's
current return. For example, where a Theme Portfolio 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 that Theme Portfolio,
an increase in the market price could result in the exercise of the call option
written by the Theme Portfolio and the realization of a loss on the underlying
security or currency. Accordingly, the Theme Portfolio could purchase a call
option on the same underlying security or currency, which could be exercised to
fulfill the Theme Portfolio's delivery obligations under its written call (if it
is exercised). This strategy could allow the Theme Portfolio to avoid selling
the portfolio security or currency at a time when it has an unrealized loss;
however, the Theme Portfolio would have to pay a premium to purchase the call
option plus transaction costs.
Aggregate premiums paid for put and call options will not exceed 5% of each
Theme Portfolio's total assets at the time of each purchase.
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G.T. GLOBAL THEME FUNDS
A Theme Portfolio 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 Theme Portfolio as purchaser the right (but not the
obligation) to sell a specified amount of currency at the exercise price at any
time until (American style) or (on European style) the expiration date of the
option. A call option gives the Theme Portfolio as purchaser the right (but not
the obligation) to purchase a specified amount of currency at the exercise price
at any time until (American style) or (on European style) the expiration date of
the option. A Theme Portfolio 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 a Theme Portfolio
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 a Theme
Portfolio anticipates purchasing securities.
Options may be either listed on an exchange or traded over-the-counter ("OTC
options"). Listed options are third-party contracts (I.E., performance of the
obligations of the purchaser and seller is guaranteed by the exchange or
clearing corporation) and have standardized strike prices and expiration dates.
OTC options are two-party contracts with negotiated strike prices and expiration
dates. A Theme Portfolio 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.
The SEC's staff considers purchased OTC options to be illiquid securities. A
Theme Portfolio may also sell OTC options and, in connection therewith,
segregate assets or cover its obligations with respect to OTC options written by
the Theme Portfolio. The assets used as cover for OTC options written by a Theme
Portfolio will be considered illiquid unless the OTC options are sold to
qualified dealers who agree that the Theme Portfolio may repurchase any OTC
option it writes at a maximum price to be calculated by a formula set forth in
the option agreement. The cover for an OTC option written subject to this
procedure would be considered illiquid only to the extent that the maximum
repurchase price under the formula exceeds the intrinsic value of the option.
The Theme Portfolio's ability to establish and close out positions in
exchange-listed options depends on the existence of a liquid market. A Theme
Portfolio 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 a Theme Portfolio will enter into OTC options only with contra
parties that are expected to be capable of entering into closing transactions
with the Theme Portfolio, there is no assurance that the Theme Portfolio will in
fact be able to close out an OTC option position at a favorable price prior to
expiration. In the event of insolvency of the contra party, the Theme Portfolio
might be unable to close out an OTC option position at any time prior to its
expiration.
INDEX OPTIONS
Puts and calls on indices are similar to puts and calls on securities or futures
contracts except that all settlements are in cash and gain or loss depends on
changes in the index in question (and thus on price movements in the securities
market or a particular market sector generally) rather than on price movements
in individual securities or futures contracts. When a Theme Portfolio writes a
call on an index, it receives a premium and agrees that, prior to the expiration
date, the purchaser of the call, upon exercise of the call, will receive from
the Theme Portfolio an amount of cash if the closing level of the index upon
which the call is based is greater than the exercise price of the call. The
amount of cash is equal to the difference between the closing price of the index
and the exercise price of the call times a specified multiple (the
"multiplier"), which determines the total dollar value for each point of such
difference. When a Theme Portfolio buys a call on an index, it pays a premium
and has the same rights as to such call as are indicated above. When a Theme
Portfolio buys a put on an index, it pays a premium and has the right, prior to
the expiration date, to require the seller of the put, upon the Theme
Portfolio's exercise of the put, to deliver to the Theme Portfolio an amount of
cash if the closing level of the index upon which the put is based is less than
the exercise price of the put, which amount of cash is determined by the
multiplier, as described above for calls. When the Theme Portfolio writes a put
on an index, it receives a premium and the purchaser has the right, prior to the
expiration date, to require the Theme Portfolio to deliver to it an amount of
cash equal to the difference between the closing level of the index and the
exercise price times the multiplier, if the closing level is less than the
exercise price.
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G.T. GLOBAL THEME FUNDS
The risks of investment in index options may be greater than options on
securities. Because index options are settled in cash, when a Theme Portfolio
writes a call on an index it cannot provide in advance for its potential
settlement obligations by acquiring and holding the underlying securities. A
Theme Portfolio can offset some of the risk of writing a call index option
position by holding a diversified portfolio of securities similar to those on
which the underlying index is based. However, a Theme Portfolio cannot, as a
practical matter, acquire and hold a portfolio containing exactly the same
securities as underlie the index and, as a result, bears a risk that the value
of the securities held will vary from the value of the index.
Even if a Theme Portfolio could assemble a securities portfolio that exactly
reproduced the composition of the underlying index, it still would not be fully
covered from a risk standpoint because of the "timing risk" inherent in writing
index options. When an index option is exercised, the amount of cash that the
holder is entitled to receive is determined by the difference between the
exercise price and the closing index level on the date when the option is
exercised. As with other kinds of options, the Theme Portfolio as the call
writer will not know that it has been assigned until the next business day at
the earliest. The time lag between exercise and notice of assignment poses no
risk for the writer of a covered call on a specific underlying security, such as
common stock, because there the writer's obligation is to deliver the underlying
security, not to pay its value as of a fixed time in the past. So long as the
writer already owns the underlying security, it can satisfy its settlement
obligations by simply delivering it, and the risk that its value may have
declined since the exercise date is borne by the exercising holder. In contrast,
even if the writer of an index call holds securities that exactly match the
composition of the underlying index, it will not be able to satisfy its
assignment obligations by delivering those securities against payment of the
exercise price. Instead, it will be required to pay cash in an amount based on
the closing index value on the exercise date; and by the time it learns that it
has been assigned, the index may have declined, with a corresponding decline in
the value of its securities portfolio. This "timing risk" is an inherent
limitation on the ability of index call writers to cover their risk exposure by
holding securities positions.
If a Theme Portfolio has purchased an index option and exercises it before the
closing index value for that day is available, it runs the risk that the level
of the underlying index may subsequently change. If such a change causes the
exercised option to fall out-of-the-money, the Theme Portfolio will be required
to pay the difference between the closing index value and the exercise price of
the option (times the applicable multiplier) to the assigned writer.
INTEREST RATE, CURRENCY AND STOCK INDEX FUTURES CONTRACTS
Each Theme Portfolio 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 price levels in order to
establish more definitely the effective return on securities or currencies held
or intended to be acquired by the Theme Portfolio. A Theme Portfolio's hedging
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 or stock
prices.
Each Theme Portfolio only will enter into Futures Contracts that are traded on
futures exchanges and are standardized as to maturity date and underlying
financial instrument. Futures exchanges and trading thereon in the United States
are regulated under the Commodity Exchange Act by the Commodity Futures Trading
Commission ("CFTC"). Futures are exchanged in London at the London International
Financial Futures Exchange.
Although techniques other than sales and purchases of Futures Contracts could be
used to reduce a Theme Portfolio's exposure to interest rate, currency exchange
rate and stock market fluctuations, that Theme Portfolio may be able to hedge
its exposure more effectively and at a lower cost through using Futures
Contracts.
A Futures Contract provides for the future sale by one party and purchase by
another party of a specified amount of a specific financial instrument (security
or currency) for a specified price at a designated date, time and place. A stock
index Futures Contract provides for the delivery, at a designated date, time and
place, of an amount of cash equal to a specified dollar amount times the
difference between the stock index value at the close of trading on the contract
and the price at which the Futures Contract is originally struck; no physical
delivery of stocks comprising the index is made. Brokerage fees are incurred
when a Futures Contract is bought or sold, and margin deposits must be
maintained at all times the Futures Contract is outstanding.
Although Futures Contracts typically require future delivery of and payment for
financial instruments or currencies, Futures Contracts usually are closed out
before the delivery date. Closing out an open Futures Contract sale or purchase
is effected by entering into an offsetting Futures Contract purchase or sale,
respectively, for the same aggregate amount of the identical financial
instrument or currency and the same delivery date. If the offsetting purchase
price is less than the
Statement of Additional Information Page 10
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G.T. GLOBAL THEME FUNDS
original sale price, the Theme Portfolio realizes a gain; if it is more, the
Theme Portfolio realizes a loss. Conversely, if the offsetting sale price is
more than the original purchase price, the Theme Portfolio realizes a gain; if
it is less, the Theme Portfolio realizes a loss. The transaction costs must also
be included in these calculations. There can be no assurance, however, that a
Theme Portfolio will be able to enter into an offsetting transaction with
respect to a particular Futures Contract at a particular time. If a Theme
Portfolio is not able to enter into an offsetting transaction, that Theme
Portfolio will continue to be required to maintain the margin deposits on the
Futures Contract.
As an example of an offsetting transaction, the contractual obligations arising
from the sale of one 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 Theme
Portfolio.
Each Theme Portfolio's Futures transactions will be entered into for hedging
purposes; that is, Futures Contracts will be sold to protect against a decline
in the price of securities or currencies that a Theme Portfolio owns, or Futures
Contracts will be purchased to protect the Theme Portfolio against an increase
in the price of securities or currencies it has committed to purchase or expects
to purchase.
"Margin" with respect to Futures Contracts is the amount of funds that must be
deposited by a Theme Portfolio in order to initiate Futures trading and maintain
the Theme Portfolio's open positions in Futures Contracts. A margin deposit made
when the Futures Contract is entered into ("initial margin") is intended to
ensure the Theme Portfolio's performance under the Futures Contract. The margin
required for a particular Futures Contract is set by the exchange on which the
Futures Contract is traded and may be significantly modified from time to time
by the exchange during the term of the Futures Contract.
Subsequent payments, called "variation margin," to and from the futures
commission merchant through which the Theme Portfolio 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 by, among other things, 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 a Theme Portfolio's
portfolio being hedged. The degree of imperfection of correlation depends upon
circumstances such as variations in speculative market demand for Futures and
for securities 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 Contracts 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.
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G.T. GLOBAL THEME FUNDS
If a Theme Portfolio were unable to liquidate a Futures or option on Futures
position due to the absence of a liquid secondary market or the imposition of
price limits, it could incur substantial losses. The Theme Portfolio would
continue to be subject to market risk with respect to the position. In addition,
except in the case of purchased options, the Theme Portfolio would continue to
be required to make daily variation margin payments and might be required to
maintain the position being hedged by the Future or option or to maintain cash
or securities in a segregated account.
Certain characteristics of the Futures market might increase the risk that
movements in the prices of Futures Contracts or options on Futures might not
correlate perfectly with movements in the prices of the investments being
hedged. For example, all participants in the Futures and options on Futures
markets are subject to daily variation margin calls and might be compelled to
liquidate Futures or options on Futures positions whose prices are moving
unfavorably to avoid being subject to further calls. These liquidations could
increase price volatility of the instruments and distort the normal price
relationship between the Futures or options and the investments being hedged.
Also, because initial margin deposit requirements in the Futures market are less
onerous than margin requirements in the securities markets, there might be
increased participation by speculators in the Futures markets. This
participation also might cause temporary price distortions. In addition,
activities of large traders in both the Futures and securities markets involving
arbitrage, "program trading" and other investment strategies might result in
temporary price distortions.
OPTIONS ON FUTURES CONTRACTS
Options on Futures Contracts are similar to options on securities or currencies
except that options on Futures Contracts give the purchaser the right, in return
for the premium paid, to assume a position in a Futures Contract (a long
position if the option is a call and a short position if the option is a put) at
a specified exercise price at any time during the period of the option. Upon
exercise of the option, the delivery of the Futures position by the writer of
the option to the holder of the option will be accompanied by delivery of the
accumulated balance in the writer's Futures margin account, which represents the
amount by which the market price of the Futures Contract, at exercise, exceeds
(in the case of a call) or is less than (in the case of a put) the exercise
price of the option on the Futures Contract. If an option is exercised on the
last trading day prior to the expiration date of the option, the settlement will
be made entirely in cash equal to the difference between the exercise price of
the option and the closing level of the securities, currencies or index upon
which the Futures Contract is based on the expiration date. Purchasers of
options who fail to exercise their options prior to the exercise date suffer a
loss of the premium paid.
The purchase of call options on Futures can serve as a long hedge, and the
purchase of put options on Futures can serve as a short hedge. Writing call
options on Futures can serve as a limited short hedge, and writing put options
on Futures can serve as a limited long hedge, using a strategy similar to that
used for writing options on securities, foreign currencies or indices.
If a Theme Portfolio writes an option on a Futures Contract, it will be required
to deposit initial and variation margin pursuant to requirements similar to
those applicable to Futures Contracts. Premiums received from the writing of an
option on a Futures Contract are included in the initial margin deposit.
A Theme Portfolio may seek to close out an option position by selling an option
covering the same Futures Contract and having the same exercise price and
expiration date. The ability to establish and close out positions on such
options is subject to the maintenance of a liquid secondary market.
LIMITATION ON USE OF FUTURES, OPTIONS ON FUTURES AND CERTAIN OPTIONS ON
CURRENCIES
To the extent that a Theme Portfolio 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 Theme Portfolio, after taking into
account unrealized profits and unrealized losses on any contracts the Theme
Portfolio has entered into. In general, a call option on a Futures Contract is
"in-the-money" if the value of the underlying Futures Contract exceeds the
strike, I.E., exercise, price of the call; a put option on a Futures Contract is
"in-the-money" if the value of the underlying Futures Contract is exceeded by
the strike price of the put. This guideline may be modified by the Company's
Board of Directors without a shareholder vote. This limitation does not limit
the percentage of a Theme Portfolio'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. A Theme Portfolio
either may accept or make delivery of the currency at the maturity of the
Forward Contract. A Theme Portfolio may also, if its contra party agrees prior
to maturity, enter into a closing transaction involving the purchase or sale of
an offsetting contract.
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G.T. GLOBAL THEME FUNDS
A Theme Portfolio engages in forward currency transactions in anticipation of,
or to protect itself against, fluctuations in exchange rates. A Theme Portfolio
might sell a particular foreign currency forward, for example, when it holds
bonds denominated in a foreign currency but anticipates, and seeks to be
protected against, a decline in the currency against the U.S. dollar. Similarly,
a Theme Portfolio might sell the U.S. dollar forward when it holds bonds
denominated in U.S. dollars but anticipates, and seeks to be protected against,
a decline in the U.S. dollar relative to other currencies. Further, a Theme
Portfolio might purchase a currency forward to "lock in" the price of securities
denominated in that currency that it anticipates purchasing.
Forward Contracts are traded in the interbank market conducted directly between
currency traders (usually large commercial banks) and their customers. A Forward
Contract generally has no deposit requirement, and no commissions are charged at
any stage for trades. Each Theme Portfolio 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 Theme Portfolios' Board of Trustees
or the Company's Board of Directors, as applicable.
A Theme Portfolio may enter into Forward Contracts either with respect to
specific transactions or with respect to overall investments of that Theme
Portfolio. The precise matching of the Forward Contract amounts and the value of
specific securities generally will not be possible because the future value of
such securities in foreign currencies will change as a consequence of market
movements in the value of those securities between the date the Forward Contract
is entered into and the date it matures. Accordingly, it may be necessary for
that Theme Portfolio 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 Theme Portfolio 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 Theme Portfolio is obligated to
deliver. The projection of short-term currency market movements is extremely
difficult, and the successful execution of a short-term hedging strategy is
highly uncertain. Forward Contracts involve the risk that anticipated currency
movements will not be predicted accurately, causing a Theme Portfolio to sustain
losses on these contracts and transaction costs.
At or before the maturity of a Forward Contract requiring a Theme Portfolio to
sell a currency, that Theme Portfolio either may sell a 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 Theme Portfolio will obtain, on the same maturity
date, the same amount of the currency that it is obligated to deliver.
Similarly, a Theme Portfolio 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. A Theme Portfolio would realize a gain or
loss as a result of entering into such an offsetting Forward Contract under
either circumstance to the extent the exchange rate or rates between the
currencies involved moved between the execution dates of the first contract and
the offsetting contract.
The cost to a Theme Portfolio 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 a Theme Portfolio 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
A Theme Portfolio 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
Theme Portfolio's securities are denominated. Such currency hedges can protect
against price movements in a security that the Theme Portfolio owns or intends
to acquire that are attributable to changes in the value of the currency in
which it is denominated. Such hedges do not, however, protect against price
movements in the securities that are attributable to other causes.
A Theme Portfolio 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 Theme Portfolio 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.
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G.T. GLOBAL THEME FUNDS
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 Theme Portfolio 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 Theme Portfolio might be required to accept or
make delivery of the underlying foreign currency in accordance with any U.S. or
foreign regulations regarding the maintenance of foreign banking arrangements by
U.S. residents and might be required to pay any fees, taxes and charges
associated with such delivery assessed in the issuing country.
COVER
Transactions using Forward Contracts, Futures Contracts and options (other than
options that a Theme Portfolio has purchased) expose the Theme Portfolio to an
obligation to another party. A Theme Portfolio will not enter into any such
transactions unless it owns either (1) an offsetting ("covered") position in
securities, currencies, or other options, Forward Contracts or Futures
Contracts, or (2) cash, receivables and short-term debt securities with a value
sufficient at all times to cover its potential obligations not covered as
provided in (1) above. Each Theme Portfolio 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 a Theme Portfolio's assets are used for cover or segregated accounts, it
could affect portfolio management or the Theme Portfolio's ability to meet
redemption requests or other current obligations.
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RISK FACTORS
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CONCENTRATION. Each Theme Portfolio concentrates its investments in the
securities of companies in the industries of its particular sector. As a result,
factors specifically affecting those industries, such as substantial government
regulation, interest rate movements, and increased competition, may have a
greater affect on the value of that Theme Portfolio's shares than on those of an
investment company that does not concentrate its investments in such industries.
In addition, as a result of each Theme Portfolio's ability to invest in
companies in its sector industries throughout the world, each Theme Portfolio is
subject to risks relating to the different and rapidly evolving regulatory
environments for companies in foreign markets.
ILLIQUID SECURITIES. Each Theme Portfolio may invest up to 15% of its net
assets (except for the Health Care Fund, which may invest up to 10% of its total
assets) in illiquid securities. Securities may be considered illiquid if a Theme
Portfolio cannot reasonably expect within seven days to sell the securities for
approximately the amount at which that Theme Portfolio values such securities.
See "Investment Limitations." The sale of illiquid securities, if they can be
sold at all, generally will require more time and result in higher brokerage
charges or dealer discounts and other selling expenses than will the sale of
liquid securities such as securities eligible for trading on U.S. securities
exchanges or in OTC markets. Moreover, restricted securities, which may be
illiquid for purposes of this limitation, often sell, if at all, at a price
lower than similar securities that are not subject to restrictions on resale.
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G.T. GLOBAL THEME FUNDS
With respect to liquidity determinations generally, the Portfolios' Board of
Trustees or the Company's Board of Directors, as applicable, 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. Each Board has delegated the function of making day-to-day
determinations of liquidity to G.T. Capital, in accordance with procedures
approved by that Board. 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 that 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 held by each Theme Portfolio and
periodically reports such determinations to the Portfolios' Board of Trustees or
the Company's Board of Directors, as applicable.
POLITICAL, SOCIAL AND ECONOMIC RISKS. Investing in securities of non-U.S.
companies may entail additional risks due to the potential political, social and
economic instability of certain countries and the risks of expropriation,
nationalization, confiscation or the imposition of restrictions on foreign
investment convertibility of currencies into U.S. dollars and on repatriation of
capital invested. In the event of such expropriation, nationalization or other
confiscation by any country, a Theme Portfolio could lose its entire investment
in any such country.
RELIGIOUS, POLITICAL AND ETHNIC INSTABILITY. Certain countries in which a
Theme Portfolio 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 a Theme Portfolio's
investment in those countries. Instability may also result from, among other
things: (i) authoritarian governments or military involvement in political and
economic decision-making, including changes in government through
extra-constitutional means; (ii) popular unrest associated with demands for
improved political, economic and social conditions; and (iii) hostile relations
with neighboring or other countries. Such political, social and economic
instability could disrupt the principal financial markets in which a Theme
Portfolio invests and adversely affect the value of a Theme Portfolio's assets.
FOREIGN INVESTMENT RESTRICTIONS. Certain countries prohibit or impose
substantial restrictions on investments in their capital markets, particularly
their equity markets, by foreign entities such as a Theme Portfolio. These
restrictions or controls may at times limit or preclude investments in certain
securities and may increase the cost and expenses of a Theme Portfolio. For
example, certain countries require prior governmental approval before
investments by foreign persons may be made, or may limit the amount of
investment by foreign persons in a particular company or limit the investment by
foreign persons to only a specific class of securities of a company that may
have less advantageous terms than securities of the company available for
purchase by nationals. Moreover, the national policies of certain countries may
restrict investment opportunities in issuers or industries deemed sensitive to
national interests. In addition, some countries require governmental approval
for the repatriation of investment income, capital or the proceeds of securities
sales by foreign investors. In addition, if there is a deterioration in a
country's balance of payments or for other reasons, a country may impose
restrictions on foreign capital remittances abroad. A Theme Portfolio could be
adversely affected by delays in, or a refusal to grant, any required
governmental approval for repatriation, as well as by the application to it of
other restrictions on investments.
NON-UNIFORM CORPORATE DISCLOSURE STANDARDS AND GOVERNMENTAL
REGULATION. Foreign companies are subject to accounting, auditing and financial
standards and requirements that differ, in some cases significantly, from those
applicable to U.S. companies. In particular, the assets, liabilities and profits
appearing on the financial statements of such a company may not reflect its
financial position or results of operations in the way they would be reflected
had such financial statements been prepared in accordance with U.S. generally
accepted accounting principles. Most of the securities held by a Theme Portfolio
will not be registered with the SEC or regulators of any foreign country, nor
will the issuers thereof be subject to the SEC's reporting requirements. Thus,
there will be less available information concerning most foreign issuers of
securities held by a Theme Portfolio 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 of information.
Statement of Additional Information Page 15
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G.T. GLOBAL THEME FUNDS
CURRENCY FLUCTUATIONS. Because each Theme Portfolio, 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 a Theme Portfolio'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 that Theme Portfolio's holdings of securities and cash
denominated in such currency and, therefore, will cause an overall decline in
the appropriate 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 that Fund. Moreover, if the value of the foreign currencies in
which a Theme Portfolio receives its income falls relative to the U.S. dollar
between receipt of the income and the making of Theme Portfolio distributions,
the Theme Portfolio may be required to liquidate securities in order to make
distributions if the Theme Portfolio has insufficient cash in U.S. dollars to
meet distribution requirements.
The rate of exchange between the U.S. dollar and other currencies is determined
by several factors, including the supply and demand for particular currencies,
central bank efforts to support particular currencies, the relative movement of
interest rates, and pace of business activity in the other countries and the
United States, and other economic and financial conditions affecting the world
economy.
Although each Theme Portfolio values its assets daily in terms of U.S. dollars,
the Portfolios do not intend to convert their holdings of foreign currencies
into U.S. dollars on a daily basis. Each Portfolio will do so, from time to
time, and investors should be aware of the costs of currency conversion.
Although foreign exchange dealers do not charge a fee for conversion, they do
realize a profit based on the difference ("spread") between the prices at which
they buy and sell various currencies. Thus, a dealer may offer to sell a foreign
currency to a Portfolio at one rate, while offering a lesser rate of exchange
should a Portfolio desire to sell that currency to the dealer.
ADVERSE MARKET CHARACTERISTICS. Securities of many foreign issuers may be
less liquid and their prices more volatile than securities of comparable U.S.
issuers. In addition, foreign securities markets and brokers generally are
subject to less governmental supervision and regulation than in the United
States, and foreign securities transactions usually are subject to fixed
commissions, which generally are 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 Theme Portfolio
are uninvested and no return is earned thereon. The inability of a Theme
Portfolio to make intended security purchases due to settlement problems could
cause that Theme Portfolio to miss attractive investment opportunities.
Inability to dispose of a portfolio security due to settlement problems either
could result in losses to that Theme Portfolio due to subsequent declines in
value of the portfolio security or, if that Theme Portfolio 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 a Theme Portfolio's assets, although G.T. Capital does not believe
that such difficulties will have a material adverse effect on a Theme
Portfolio's portfolio trading activities.
Each Theme Portfolio may use foreign custodians, which may involve risks in
addition to those related to its use of U.S. custodians. Such risks include
uncertainties relating to determining and monitoring the foreign custodian's
financial strength, reputation and standing; maintaining appropriate safeguards
concerning that Theme Portfolio's investments; and possible difficulties in
obtaining and enforcing judgments against such custodians.
WITHHOLDING TAXES. Each Theme Portfolio's net investment income from foreign
issuers may be subject to withholding taxes by the foreign issuer's country,
thereby reducing that Theme Portfolio's net investment income or delaying the
receipt of income where those taxes may be recaptured. See "Taxes."
SPECIAL CONSIDERATIONS AFFECTING EUROPE. The countries that are members of
the European Economic Community ("Common Market") (Belgium, Denmark, France,
Greece, Ireland, Italy, Luxembourg, Netherlands, Portugal, Spain, the United
Kingdom and Germany) eliminated certain import tariffs and quotas and other
trade barriers with respect to one another over the past several years. G.T.
Capital believes that this deregulation should improve the prospects for
economic growth in many European countries. Among other things, the deregulation
could enable companies domiciled in one country to avail themselves of lower
labor costs existing in other countries. In addition, this deregulation could
benefit companies domiciled in one country by opening additional markets for
their goods and services in other countries. Since, however, it is not clear at
this time what the exact form or effect of these Common Market reforms will be
on business in Western Europe or the emerging European markets, it is impossible
to predict the long-term impact of the implementation of these programs on the
securities owned by a Theme Portfolio.
SPECIAL CONSIDERATIONS AFFECTING JAPAN AND HONG KONG. The concentration of
investments by a Theme Portfolio in Japan means that the Portfolio may be more
volatile than a fund that is broadly diversified geographically. Overseas trade
is
Statement of Additional Information Page 16
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G.T. GLOBAL THEME FUNDS
important to Japan's economy. Japan has few natural resources and must export to
pay for its imports of these basic requirements. Because of the concentration of
Japanese exports in highly visible products, Japan has had difficult relations
with its trading partners, particularly the United States, where the trade
imbalance is the greatest. It is possible that trade sanctions or other
protectionist measures could impact Japan adversely in both the short and the
long term. The Japanese securities markets are less regulated than those in the
United States. Evidence has emerged from time to time of distortion of market
prices to serve political or other purposes. Shareholders' rights are not always
equally enforced.
Hong Kong is a British colony which will transfer sovereignty to the Peoples
Republic of China in 1997. China has espoused policies antagonistic to free
enterprise, capitalism and democracy. There can be no guarantee that property
rights will continue to be safeguarded in Hong Kong after 1997, although
recently China has moved toward free enterprise, and has established stock
exchanges of its own.
SPECIAL CONSIDERATIONS AFFECTING EMERGING MARKETS. 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 into U.S.
dollars and on repatriation of capital invested. In the event of such
expropriation, nationalization or other confiscation by any country, a Theme
Portfolio could lose its entire investment in any such country.
Emerging securities markets are substantially smaller, less developed, less
liquid and more volatile than the major securities markets. The limited size of
emerging securities markets and limited trading value in issuers compared to the
volume of trading in U.S. securities could cause prices to be erratic for
reasons apart from factors that affect the quality of the securities. For
example, limited market size may cause prices to be unduly influenced by traders
who control large positions. Adviser publicity and investors' perceptions,
whether or not based on fundamental analysis, may decrease the value and
liquidity of portfolio securities, especially in these markets. In addition,
securities traded in certain emerging markets may be subject to risks due to the
inexperience of financial intermediaries, a lack of modern technology, the lack
of a sufficient capital base to expand business operations, and the possibility
of permanent or temporary termination of trading.
Settlement mechanisms in emerging securities markets may be less efficient and
reliable than in more developed markets. In such emerging securities 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.
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INVESTMENT LIMITATIONS
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FEEDER FUNDS
The Financial Services Fund, Infrastructure Fund, Natural Resources Fund and
Consumer Products and Services Fund each has the following fundamental
investment policy to enable it to invest in the Financial Services Portfolio,
Infrastructure Portfolio, Natural Resources Portfolio and Consumer Products and
Services Portfolio respectively:
Notwithstanding any other investment policy of the Fund, the Fund may invest all
of its investable assets (cash, securities and receivables related to
securities) in an open-end management investment company having substantially
the same investment objective, policies and limitations as the Fund.
All other fundamental investment policies, and the non-fundamental policies, of
each Feeder Fund and its corresponding Portfolio are identical. Therefore,
although the following discusses the investment policies of each Portfolio and
its Board of Trustees, it applies equally to each Feeder Fund and their Board of
Directors.
Each Portfolio 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 that Portfolio's shares represented at a
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G.T. GLOBAL THEME FUNDS
meeting at which more than 50% of the outstanding shares are represented, or
(ii) more than 50% of the outstanding shares. Whenever a Feeder Fund is
requested to vote on a change in the investment limitations of its corresponding
Portfolio, such Fund will hold a meeting of its shareholders and will cast its
votes as instructed by its shareholders.
Each Portfolio may not:
(1) Buy or sell real estate (including real estate limited
partnerships); however, each Portfolio 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;
(2) Buy or sell commodities or commodity contracts, except that each
Portfolio may purchase and sell financial and currency futures contracts and
options thereon, and may purchase and sell currency forward contracts,
options on foreign currencies and may otherwise engage in other transactions
in foreign currencies;
(3) Underwrite securities of other issuers, except to the extent that
the disposition 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 each Portfolio may purchase debt securities
and enter into repurchase agreements and may make loans of portfolio
securities;
(5) Purchase securities on margin, provided that each Portfolio 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 not in excess of 33 1/3% of the value
of each Portfolio's total assets, (including the amount borrowed), less all
liabilities and indebtedness (other than the borrowing). This restriction
shall not prevent any Portfolio from entering into reverse repurchase
agreements, provided that reverse repurchase agreements, and any other
transactions constituting borrowing by a Portfolio may not exceed one-third
of that Portfolio's total assets. Transactions involving options, futures
contracts, options on futures contracts and forward currency contracts, as
described in the Prospectus and Statement of Additional Information, and
collateral arrangements relating thereto will not be deemed to be
borrowings;
(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; or
(8) Invest in direct interests or leases in oil, gas, or other mineral
exploration or development programs; however, each Portfolio may invest in
the securities of companies that engage in these activities.
In addition, each Portfolio has adopted as a fundamental investment policy a
classification as a "diversified" portfolio under the 1940 Act. This means that,
with respect to 75% of the Portfolio's total assets, no more than 5% will be
invested in the securities of any one issuer, and the Portfolio will purchase no
more than 10% of the outstanding voting securities of any one issuer. This
policy cannot be changed without approval by the holders of a majority of the
Portfolio's outstanding voting securities as defined above and in the
Prospectus.
The following investment policies of each Portfolio are not fundamental policies
and may be changed by vote of the Portfolios' Board of Trustees without
shareholder approval. No Portfolio may:
(1) Invest in securities of an issuer if the investment would cause the
Portfolio 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 15% of its net 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 Trustees of the Portfolio, the Portfolio'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;
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G.T. GLOBAL THEME FUNDS
(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 Portfolio's portfolio, after taking into
account unrealized profits and unrealized losses on any contracts the
Portfolio has entered into;
(7) Borrow money except for temporary or emergency purposes (not for
leveraging) in excess of 33 1/3% of the value of the Portfolio's total
assets (while borrowings exceed 5% of the Infrastructure Portfolio's and
Natural Resources Portfolio's total assets, such Portfolio will not make any
additional investments); and
(8) Invest more than 10% of its total assets in shares of other
investment companies and 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 investment objective of each Feeder Fund, which may not be changed without
the approval of Fund shareholders, and its corresponding Portfolios' investment
objective, which may be changed without the approval of its shareholders, and
other investment policies, techniques and limitations, which may or may not be
changed without shareholder approval.
HEALTH CARE FUND
The Health Care 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 Health Care Fund's
shares represented at a meeting at which more than 50% of the outstanding shares
are represented, or (ii) more than 50% of the outstanding shares.
The Health Care Fund may not:
(1) Invest more than 10% of its total assets in securities which cannot
be readily resold to the public because of legal or contractual restrictions
or for which no readily available market exists, which for this purpose
includes repurchase agreements maturing in more than seven days;
(2) Invest in companies for the purpose of exercising control or
management;
(3) Purchase or sell real estate; provided that the Health Care Fund may
invest in securities secured by real estate or interests therein or issued
by companies that invest in real estate or interests therein;
(4) Purchase securities on margin or make short sales, except for
short-term credits necessary for clearance of portfolio transactions, and
except that the Health Care Fund may make short sales and maintain short
positions and may make margin deposits in connection with its use of
options, futures contracts and options on futures contracts;
(5) Underwrite securities of other issuers, except to the extent that,
in connection with the disposition of portfolio securities, the Health Care
Fund may be deemed to be an underwriter under federal securities laws;
(6) Make loans, except through loans of portfolio securities as
authorized by the Health Care Fund's Prospectus and except through
repurchase agreements, provided that for purposes of this limitation the
acquisition of portfolio securities consistent with the Health Care Fund's
investment objective and policies shall not be deemed to be the making of a
loan;
(7) Purchase or sell commodities or commodity contracts, except that
consistent with the Health Care Fund's investment objective and policies the
Health Care Fund may use financial and currency futures instruments and
options thereon for hedging purposes;
(8) Issue senior securities, except that for purposes of this limitation
the Health Care Fund may borrow money in such amounts and in such fashion as
is permitted under the 1940 Act and the rules thereunder;
(9) Mortgage, pledge or hypothecate or in any manner transfer, as
security for indebtedness, any securities owned or held by the Health Care
Fund, except as may be necessary in connection with permitted borrowings;
provided, however, that this does not prohibit escrow, collateral or margin
arrangements in connection with the Health Care Fund's use of options,
futures contracts and options on futures contracts;
(10) Invest in oil, gas or mineral-related programs or leases; or
Statement of Additional Information Page 19
<PAGE>
G.T. GLOBAL THEME FUNDS
(11) Purchase any security if as a result more than 5% of the Health Care
Fund's total assets would be invested in securities of companies which
together with any predecessors have been in operation for less than three
years.
An additional investment policy of the Health Care Fund, which may be changed by
vote of the Company's Board of Directors without shareholder approval, provides
that the Health Care Fund will not invest in securities of an issuer if the
investment would cause the Health Care Fund to own more than 10% of any class of
securities of any one issuer. Although it intends to do so only infrequently, if
at all, the Health Care Fund has the authority to invest up to 10% of its total
assets in shares of other investment companies. The Health Care 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 Health Care 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.
TELECOMMUNICATIONS FUND
The Telecommunications 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 Telecommunications
Fund's shares represented at a meeting at which more than 50% of the outstanding
shares are represented, or (ii) more than 50% of the outstanding shares.
The Telecommunications Fund may not:
(1) Buy or sell real estate (including real estate limited
partnerships); however, the Telecommunications 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;
(2) Purchase or sell commodities or commodity contracts, except that the
Telecommunications Fund may purchase and sell financial and currency futures
contracts and options thereon, and may purchase and sell currency forward
contracts, options on foreign currencies and may otherwise engage in other
transactions in foreign currencies;
(3) Engage in the business of underwriting securities of other issuers,
except to the extent that the disposition 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 Telecommunications 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 Telecommunications
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 not in excess of 33 1/3% of the value
of the Telecommunications Fund's total assets, including the amount
borrowed, less all liabilities and indebtedness (other than the borrowing).
This restriction shall not prevent the Telecommunications Fund from entering
into reverse repurchase agreements, provided that reverse repurchase
agreements, and any other transactions constituting borrowing by the
Telecommunications Fund may not exceed one-third of the Telecommunications
Fund's total assets. Transactions involving options, futures contracts,
options on futures contracts and forward currency contracts, as described in
the Prospectus and Statement of Additional Information, and collateral
arrangements relating thereto will not be deemed to be borrowings;
(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; or
(8) Invest in direct interests or leases in oil, gas, or other mineral
exploration or development programs; however, the Telecommunications Fund
may invest in the securities of companies that engage in these activities.
In addition, the Telecommunications Fund has adopted as a fundamental investment
policy the classification as a "diversified" fund under the 1940 Act which means
that, with respect to 75% of the Telecommunications Fund's total assets, no more
than 5% will be invested in the securities of any one issuer, and the
Telecommunications Fund will purchase no more than 10% of the outstanding voting
securities of any one issuer. This policy cannot be changed without
Statement of Additional Information Page 20
<PAGE>
G.T. GLOBAL THEME FUNDS
approval by the holders of a majority of the Telecommunications Fund's
outstanding voting securities as defined above and in the Prospectus.
The following operating policies of the Telecommunications Fund are not
fundamental policies and may be changed by vote of the Company's Board of
Directors without shareholder approval. The Telecommunications Fund may not:
(1) Invest in securities of an issuer if the investment would cause the
Telecommunications 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 15% of its net 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 Telecommunications 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;
(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; or
(7) Borrow money except for temporary or emergency purposes (not for
leveraging) not in excess of 33 1/3% of the value of the Telecommunications
Fund's total assets. While borrowings exceed 5% of the Telecommunications
Fund's total assets, the Telecommunications Fund will not make any
additional investments.
The Telecommunications Fund has the authority to invest up to 10% of its total
assets in shares of other investment companies, and in real estate investment
trusts. The Telecommunications 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 Telecommunications Fund's investment objective, which may not be changed
without the approval of shareholders, and other investment policies, techniques
and limitations, which may be changed without shareholder approval.
------------------------
If a percentage restriction on investment or utilization of assets in an
investment policy or restriction is adhered to at the time an investment is
made, a later change in percentage ownership of a security or kind of securities
resulting from changing market values or a similar type of event will not be
considered a violation of a Fund's or Portfolio's investment policies or
restrictions. A Fund or Portfolio may exchange securities, exercise conversion
or subscription rights, warrants or other rights to purchase common stock or
other equity securities and may hold, except to the extent limited by the 1940
Act, any such securities so acquired without regard to the Fund's or Portfolio's
investment policies and restrictions. The original cost of the securities so
acquired will be included in any subsequent determination of a Fund's or
Portfolio's compliance with the investment percentage limitations referred to
above and in the Prospectus.
Statement of Additional Information Page 21
<PAGE>
G.T. GLOBAL THEME FUNDS
EXECUTION OF PORTFOLIO
TRANSACTIONS
- --------------------------------------------------------------------------------
Subject to policies established by the Company's Board of Directors and the
Portfolios' Board of Trustees, G.T. Capital is responsible for the execution of
each Theme Portfolio's securities transactions and the selection of
broker/dealers who execute such transactions on behalf of each Theme Portfolio.
In executing portfolio transactions, G.T. Capital seeks the best net results for
each Theme Portfolio, taking into account such factors as the price (including
the applicable brokerage commission or dealer spread), size of the order,
difficulty of execution and operational facilities of the firm involved.
Although 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 each Theme Portfolio may engage in
soft dollar arrangements for research services, as described below, each Theme
Portfolio 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 each Theme Portfolio, G.T. Capital may select
broker/dealers to execute that Theme Portfolio's portfolio transaction on the
basis of the research and brokerage services they provide to G.T. Capital for
its use in managing that Theme Portfolio and its other advisory accounts. Such
services may include furnishing analyses, reports and information concerning
issuers, industries, securities, geographic regions, economic factors and
trends, portfolio strategy, and performance of accounts; and effecting
securities transactions and performing functions incidental thereto (such as
clearance and settlement). Research and brokerage services received from such
broker is in addition to, and not in lieu of, the services required to be
performed by G.T. Capital under the applicable Investment Management and
Administration Contract (defined below). A commission paid to such broker may be
higher than that which another qualified broker would have charged for effecting
the same transaction, provided that 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 that Theme Portfolio and its other
clients and that the total commissions paid by the Theme Portfolio will be
reasonable in relation to the benefits received by that Theme Portfolio over the
long term. Research services may also be received from dealers who execute Theme
Portfolio transactions in over-the-counter-markets.
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 a Theme Portfolio toward payment of that Theme
Portfolio's expenses, such as custodian fees.
Investment decisions for a Theme Portfolio 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 a Theme Portfolio. In such
cases, simultaneous transactions may occur. Purchases or sales are then
allocated as to price or amount in a manner deemed fair and equitable to all
accounts involved. While in some cases this practice could have a detrimental
effect upon the price or value of the security as far as a Theme Portfolio is
concerned, in other cases G.T. Capital believes that coordination and the
ability to participate in volume transactions will be beneficial to that Theme
Portfolio.
Under a policy adopted by the Company's Board of Directors and a Portfolio's
Board of Trustees, 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 Funds and
the other portfolios for which G.T. Capital serves as investment manager or
administrator in selecting broker/dealers for the execution of portfolio
transactions. This policy does not imply a commitment to execute portfolio
transactions through all broker/dealers that sell shares of the Funds and such
other portfolios.
Each Theme Portfolio contemplates purchasing most foreign equity securities in
OTC markets or stock exchanges located in the countries in which the respective
principal offices of the issuers of the various securities are located, if that
is the best available market. The fixed commissions paid in connection with most
such foreign stock transactions generally are higher than negotiated commissions
on U.S. transactions. There generally is less government supervision and
regulation of foreign stock exchanges and brokers than in the United States.
Foreign security settlements may in some instances be subject to delays and
related administrative uncertainties.
Foreign equity securities may be held by a Theme Portfolio 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
Statement of Additional Information Page 22
<PAGE>
G.T. GLOBAL THEME FUNDS
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 a Theme Portfolio may invest are generally traded in
the over-the-counter markets.
A Theme Portfolio does not have any obligation to deal with any broker/dealer or
group of broker/dealers in the execution of securities transactions. Each Theme
Portfolio contemplates that, consistent with the policy of obtaining the best
net results, brokerage transactions may be conducted through certain companies
that are members of the BIL GT Group. The Company's Board of Directors or the
Portfolios' Board of Trustees, as applicable, has adopted procedures in
conformity with Rule 17e-1 under the 1940 Act to ensure that all brokerage
commissions paid to such affiliates are reasonable and fair in the context of
the market in which they are operating. Any such transactions will be effected
and related compensation paid only in accordance with applicable SEC
regulations. For the fiscal years ended October 31, 1994, 1993, 1992, the Health
Care Fund paid aggregate brokerage commissions of $480,241, $665,620 and
$480,293, respectively. For the fiscal years ended October 31, 1994 and 1993 and
for the fiscal period January 27, 1992 (commencement of operations) to October
31, 1992, the Telecommunications Fund paid aggregate brokerage commissions of
$5,674,965, $2,051,270 and $1,110,119, respectively. For the fiscal period May
31, 1994 (commencement of operations) to October 31, 1994, the Financial
Services Portfolio, Infrastructure Portfolio and Natural Resources Portfolio
paid aggregate brokerage commissions of $18,145, $111,512 and $132,572,
respectively.
THEME PORTFOLIO TRADING AND TURNOVER
Although each Theme Portfolio does not intend generally to trade for short-term
profits, the securities held by that Theme 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 (except to the extent necessary to
avoid non-compliance with the "Short-Short Limitation" described in "Taxes").
A Theme Portfolio engages in such trading when G.T. Capital has concluded that
the sale of a security owned by that Theme Portfolio 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 each
Theme Portfolio's investment objective, a security may also 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.
Each Theme Portfolio 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 a Theme Portfolio 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 that Theme Portfolio
during such year. Higher portfolio turnover involves correspondingly greater
brokerage commissions and other transaction costs that the Theme Portfolio will
bear directly. For the fiscal years ended October 31, 1994 and 1993, the
Telecommunications Fund's portfolio turnover rates were 57% and 41%,
respectively. For the fiscal years ended October 31, 1994 and 1993, the Health
Care Fund's portfolio turnover rates were 64% and 61%, respectively. For the
fiscal period May 31, 1994 (commencement of operations) to October 31, 1994, the
portfolio turnover rates for the Financial Services Portfolio, Infrastructure
Portfolio and Natural Resources Portfolio were 53%, 18% and 137%, respectively.
Statement of Additional Information Page 23
<PAGE>
G.T. GLOBAL THEME FUNDS
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 term
"Directors" as used below refers to the Company's Directors and the Portfolios'
Trustees collectively. The Company's Directors and Executive Officers and the
Portfolios' Trustees and Executive Officers are listed below.
<TABLE>
<CAPTION>
NAME, POSITION(S) WITH THE PRINCIPAL OCCUPATIONS AND BUSINESS
COMPANY AND ADDRESS EXPERIENCE FOR PAST 5 YEARS
- --------------------------------------- ------------------------------------------------------------------------------------------
<S> <C>
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 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 with Baker & McKenzie (a law firm), and serves as Director and Chairman of C.D.
Director Stimson Company (a private investment company); Trustee, Seattle Art Museum. Mr. Bayley
Two Embarcadero Center also is a director or trustee of each of the other investment companies registered under
San Francisco, CA 94111 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
</TABLE>
Statement of Additional Information Page 24
<PAGE>
G.T. GLOBAL THEME FUNDS
<TABLE>
<CAPTION>
NAME, POSITION(S) WITH THE PRINCIPAL OCCUPATIONS AND BUSINESS
COMPANY AND ADDRESS EXPERIENCE FOR PAST 5 YEARS
- --------------------------------------- ------------------------------------------------------------------------------------------
Gary Kreps, 40 Senior Vice President and Chief Investment Officer - Global Fixed Income Investments and a
Vice President and Chief Director of G.T. Capital since 1992. Prior to joining G.T. Capital, Mr. Kreps was Senior
Investment Officer - Vice President of the Putnam Companies from 1988 to 1992.
Global Fixed Income
50 California Street
San Francisco, CA 94111
<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.
Chief Financial Officer Capital and G.T. Global since 1987 ; Vice President -- Finance of G.T. Services since
50 California Street 1990; and a 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 Principal of Putnam Fiduciary Trust Company from 1989 to 1992.
Accounting Officer
50 California Street
San Francisco, CA 94111
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.
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
<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. Global Developing Markets Fund, Inc., and a Trustee and
officer of G.T. Global Growth Series, G.T. Greater Europe Fund, G.T. Global
Variable Investment Trust, G.T. Global Variable Investment Series, Global
Investment Portfolio (of which the Portfolios are subtrusts), and Global High
Income 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 a year, plus $300 per Fund for each meeting of the Board attended by the
Director, and reimburses travel and other expenses incurred in connection with
attending Board meetings. Other Directors and officers receive no compensation
or expense reimbursement from the Company. As of the date of this Statement, 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 each Fund or
of all the Company's funds in the aggregate. For the fiscal year ended December
31, 1994, the Company paid Mr. Anderson, Mr. Bayley, Mr. Patterson and Ms.
Quigley Directors' fees and expense reimbursements of $37,114, $39,425, $31,941
and $33,178, respectively. For the fiscal 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 $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 Funds,
except in the Financial Services Fund, in the aggregate. 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 1.04% of
the outstanding shares of the Financial Services Fund.
Statement of Additional Information Page 25
<PAGE>
G.T. GLOBAL THEME FUNDS
MANAGEMENT
- --------------------------------------------------------------------------------
INVESTMENT MANAGEMENT AND ADMINISTRATION SERVICES RELATING TO THE FEEDER FUNDS
AND THE PORTFOLIOS
G.T. Capital serves as each Portfolio's investment manager and administrator
under an Investment Management and Administration Contract between each
Portfolio and G.T. Capital ("Portfolio Management Contract"). G.T. Capital
serves as administrator to each Feeder Fund under an administration contract
between the Company and G.T. Capital ("Administration Contract"). The
Administration Contract will not be deemed an advisory contract, as defined
under the 1940 Act. As investment manager and administrator, G.T. Capital makes
all investment decisions for each Portfolio and, as administrator, administers
each Portfolio's and 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
each Portfolio and each Feeder Fund and provides suitable office space,
necessary small office equipment and utilities. For these services, each Feeder
Fund pays administration fees, computed daily and paid monthly, to G.T. Capital
at the annualized rate of 0.25% of the Fund's average daily net assets. In
addition, each Feeder Fund bears a pro rata portion of the investment management
and administration fee paid by its corresponding Portfolio to G.T. Capital. Each
Portfolio pays such fees based on its average daily net assets, also computed
daily and paid monthly, at the annualized rate of 0.725% on the first $500
million, .70% on the next $500 million, .675% on the next $500 million, and .65%
on all amounts thereafter.
The Portfolio Management Contract and the Administration Contract each has an
initial two-year term (or will expire on June 30, 1995, whichever is earlier)
with respect to each Portfolio and its corresponding Feeder Fund, respectively,
from the date of the commencement of the Fund's operations. The Portfolio
Management Contract may be renewed with respect to a Portfolio for additional
one-year terms thereafter, provided that any such renewal has been specifically
approved at least annually by (i) the Portfolios' Board of Trustees or the vote
of a majority of the Portfolio's outstanding voting securities (as defined in
the 1940 Act) and (ii) a majority of Trustees who are not parties to the
Portfolio Management Contract or "interested persons" of any such party (as
defined in the 1940 Act), cast in person at a meeting called for the specific
purpose of voting on such approval. Regarding the Financial Services Fund,
Infrastructure Fund and Natural Resources Fund, the Portfolio Management
Contract and the Administration Contract were each approved by vote of the
Portfolios' Board of Trustees and the Company's Board of Directors on January
11, 1994, and by G.T. Capital as the initial shareholder of the Feeder Fund on
April 8, 1994. Regarding the Consumer Products and Services Fund, the Portfolio
Management Contract and the Administration Contract were each approved by vote
of the Portfolios' Board of Trustees and the Company's Board of Directors on
June 15, 1994, and by G.T. Capital as the initial shareholder of the Fund on
December 20, 1994. The Portfolio Management Contract provides that with respect
to each Portfolio, and the Administration Contract provides that with respect to
each Feeder Fund, either the Company, each Portfolio or G.T. Capital may
terminate the Contract without penalty upon sixty days' written notice to the
other party. The Portfolio Management Contract terminates automatically in the
event of its assignment (as defined in the 1940 Act).
Under the Portfolio Management Contract, G.T. Capital has agreed to reduce the
investment management and administration fees payable by each Portfolio by the
amount that the ordinary operating expenses (exclusive of brokerage commissions,
organization expenses, interest, taxes, distribution-related expenses, certain
expenses attributable to investing outside the United States and extraordinary
expenses) of that Portfolio for any fiscal year borne by its corresponding Fund,
together with the direct ordinary operating expenses (exclusive of brokerage
commission, organization expenses, taxes, interest, certain distribution-related
expenses and extraordinary expenses) of such Fund, shall exceed the most
stringent limits prescribed by any state in which the shares of the Fund are
offered for sale. Currently, the most restrictive applicable limitation provides
that a Feeder 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 all average net assets thereafter. G.T. Capital and
G.T. Global have voluntarily undertaken to limit the Class A and Class B
expenses of each Feeder Fund (exclusive of brokerage commissions, interest,
taxes and extraordinary items) to the maximum annual level of 2.40% and 2.90%,
respectively, of the average daily net assets of the respective classes of the
Fund during each fiscal year, and G.T. Capital has agreed to reimburse each
Feeder Fund if its expenses exceed that amount.
Statement of Additional Information Page 26
<PAGE>
G.T. GLOBAL THEME FUNDS
INVESTMENT MANAGEMENT AND ADMINISTRATION SERVICES RELATING TO THE HEALTH CARE
FUND AND TELECOMMUNICATIONS FUND
G.T. Capital serves as the investment manager and administrator to the Health
Care Fund and Telecommunications Fund 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 Health Care Fund and Telecommunications Fund and
administers the Health Care Fund and Telecommunications 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 Health Care Fund and
Telecommunications Fund, and provides suitable office space, necessary small
office equipment and utilities. For these services, the Health Care Fund and
Telecommunications Fund each pays G.T. Capital investment management and
administration fees, based on the Health Care Fund and Telecommunications 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 all amounts thereafter.
The Management Contract relating to the Health Care Fund and the
Telecommunications Fund took effect August 7, 1989, and January 27, 1992,
respectively, and had an initial two-year term. The Management Contract may be
renewed for additional one-year terms thereafter with respect to the Health Care
Fund and Telecommunications 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 Health Care Fund and
Telecommunications 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 most recently approved with respect to the
Health Care Fund and Telecommunications Fund by the vote of the Board of
Directors of the Company on June 15, 1994 and by the Health Care Fund's and
Telecommunications Fund's shareholders at their meetings on June 25, 1991 and
January 20, 1993, respectively. The Management Contract provides that with
respect to the Health Care Fund and Telecommunications 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 waive its investment
management and administration fees from the Health Care Fund and
Telecommunications Fund and to reimburse the Health Care Fund's and
Telecommunications Fund to the extent necessary to assure that the Health Care
Fund's and Telecommunications Fund's annual expenses (exclusive of brokerage
commissions, organizational expenses, taxes, interest, distribution-related
expenses, certain expenses attributable to investing outside the United States
and extraordinary expenses) do not exceed the most stringent expense limitations
prescribed by any state in which the Health Care Fund and Telecommunications
Fund's shares are offered for sale. Currently, the most restrictive applicable
limitation provides that the Health Care Fund and Telecommunications 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. In addition, G.T. Global and G.T. Capital
have voluntarily undertaken to limit the Health Care Fund's and
Telecommunications Fund's Class A and Class B share expenses (exclusive of
brokerage commissions, taxes, interest and extraordinary expenses) to the annual
level of 2.40% and 2.90% of the average daily net assets of the Class A and
Class B shares, respectively, during each fiscal year, and G.T. Capital has
agreed to reimburse the Health Care Fund and Telecommunications Fund if the
Health Care Fund's and Telecommunications Fund's expenses exceed that amount.
Statement of Additional Information Page 27
<PAGE>
G.T. GLOBAL THEME FUNDS
The following table discloses the amount of investment management and
administration fees paid by the Theme Portfolios to G.T. Capital during the
periods shown:
HEALTH CARE FUND
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31, AMOUNT PAID
- ---------------------------------------------------------------------------------------------------------- --------------
<S> <C>
1994...................................................................................................... $ 4,353,688
1993...................................................................................................... 5,331,224
1992...................................................................................................... 6,789,400
</TABLE>
TELECOMMUNICATIONS FUND
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31, AMOUNT PAID
- ---------------------------------------------------------------------------------------------------------- --------------
<S> <C>
1994...................................................................................................... $ 21,926,187
1993...................................................................................................... 7,254,611
1992 (since Fund inception on January 27, 1992)........................................................... 2,624,818
</TABLE>
FINANCIAL SERVICES PORTFOLIO
<TABLE>
<CAPTION>
AMOUNT PAID
--------------
<S> <C>
May 31, 1994 (commencement of operations) to October 31, 1994............................................. $ 0
</TABLE>
INFRASTRUCTURE PORTFOLIO
<TABLE>
<CAPTION>
AMOUNT PAID
--------------
<S> <C>
May 31, 1994 (commencement of operations) to October 31, 1994............................................. $ 3,021
</TABLE>
NATURAL RESOURCES PORTFOLIO
<TABLE>
<CAPTION>
AMOUNT PAID
--------------
<S> <C>
May 31, 1994 (commencement of operations) to October 31, 1994............................................. $ 0
</TABLE>
For the fiscal period May 31, 1994 (commencement of operations) to October 31,
1994, G.T. Capital reimbursed the Financial Services Portfolio, Infrastructure
Portfolio and Natural Resources Portfolio for their respective investment
management and administration fees in the amounts of $8,249, $48,901 and
$28,500, respectively. For the same period, the Financial Services Fund,
Infrastructure Fund and Natural Resources Fund did not pay any administration
fees; however, G.T. Capital reimbursed those Funds for such fees in the amounts
of $3,029, $19,370 and $10,436, respectively. Accordingly, G.T. Capital
reimbursed the Financial Services Fund, Infrastructure Fund and Natural
Resources Fund and their respective Portfolios investment management and
administration fees in the aggregate amounts of $11,278, $68,271 and $38,936,
respectively.
For the fiscal period May 31, 1994 (commencement of operations) to October 31,
1994, G.T. Capital, pursuant to a voluntary expense undertaking to limit
expenses to the maximum annual level of 2.40% and 2.90%, respectively, of
average daily net assets of the Class A shares and Class B shares of the Funds,
reimbursed the Financial Services Fund and Natural Resources Fund for Class A
and Class B expenses in the additional amounts of $85,566 and $49,648,
respectively.
DISTRIBUTION SERVICES RELATING TO EACH FUND
Each Fund's Class A and Class B shares are offered continuously through each
Fund's principal underwriter and distributor, G.T. Global, on a "best efforts"
basis pursuant to separate Distribution Contracts between the Company and G.T.
Global. The Distribution Contracts were approved with respect to the Fund's
Class A and Class B shares by the Board of Directors for the Financial Services
Fund, Infrastructure Fund, Natural Resources Fund, Health Care Fund and
Telecommunications Fund on June 15, 1994, and on November 10, 1994 for the
Consumer Products and Services Fund.
As described in the Prospectus, the Company has adopted separate Distribution
Plans with respect to Class A and Class B shares of the Funds in accordance with
the provisions of Rule 12b-1 under the 1940 Act ("Class A Plan" and "Class B
Plan") (collectively, "Plans"). The rate of payments by the Funds under the
Plans, as described in the Prospectus, may not be increased without the approval
of the majority of the outstanding voting securities of the affected class. All
expenses for which G.T. Global is reimbursed under the Class A Plan will have
been incurred within one year of such reimbursement. Each Fund makes no payments
under the Plans to any party other than G.T. Global, which is the distributor
(principal
Statement of Additional Information Page 28
<PAGE>
G.T. GLOBAL THEME FUNDS
underwriter) of the Funds' shares. The following table discloses payments made
by the Theme Funds to G.T. Global under each Fund's Class A Plan and Class B
Plan for the Fund's fiscal year ended October 31, 1994:
HEALTH CARE FUND
<TABLE>
<CAPTION>
CLASS A CLASS B
AMOUNT PAID AMOUNT PAID
------------- -------------
<S> <C> <C>
Year ended October 31, 1994................................................................. $ 2,102,985 $ 259,350
</TABLE>
TELECOMMUNICATIONS FUND
<TABLE>
<CAPTION>
CLASS A CLASS B
AMOUNT PAID AMOUNT PAID
------------- -------------
<S> <C> <C>
Year ended October 31, 1994................................................................. $ 7,330,230 $ 8,894,192
</TABLE>
FINANCIAL SERVICES FUND
<TABLE>
<CAPTION>
CLASS A CLASS B
AMOUNT PAID AMOUNT PAID
------------- -------------
<S> <C> <C>
May 31, 1994 (commencement of operations) to October 31, 1994............................... $ 3,860 $ 4,398
</TABLE>
INFRASTRUCTURE FUND
<TABLE>
<CAPTION>
CLASS A CLASS B
AMOUNT PAID AMOUNT PAID
------------- -------------
<S> <C> <C>
May 31, 1994 (commencement of operations) to October 31, 1994............................... $ 18,271 $ 40,937
</TABLE>
NATURAL RESOURCES FUND
<TABLE>
<CAPTION>
CLASS A CLASS B
AMOUNT PAID AMOUNT PAID
------------- -------------
<S> <C> <C>
May 31, 1994 (commencement of operations) to October 31, 1994............................... $ 11,282 $ 19,180
</TABLE>
The Plans were approved on June 15, 1994, with respect to the Financial Services
Fund, Infrastructure Fund, Natural Resources Fund, Health Care Fund and
Telecommunications Fund and on November 10, 1994, with respect to the Consumer
Products and Services Fund, by the Company's Board of Directors, including a
majority of Directors who are not "interested persons" of the Company (as
defined in the 1940 Act) and who have no direct or indirect financial interests
in the operation of the Plans, or in any agreement related thereto ("Qualified
Directors"). In approving the Plans, the Directors determined that the adoption
of the Plans was in the best interests of the shareholders of that Fund.
Agreements related to the Plans must also be approved by such vote of the
Directors and Qualified Directors as described above. A plan of distribution,
which was substantially similar to the Class A Plan, was approved by the Health
Care Fund and Telecommunications Fund's shareholders at their meetings held on
June 25, 1991 and January 20, 1993, respectively, which was subsequently amended
to reflect certain changes, including (i) reference to the addition of the Class
B Plan and (ii) changes in the rules of the National Association of Securities
Dealers, Inc. ("NASD"). The Class B Plan was approved by G.T. Capital as initial
sole shareholder of the Class B shares of the Health Care Fund and
Telecommunications Fund on March 31, 1993. The Class A and Class B Plans for the
(i) Financial Services Fund, Infrastructure Fund and Natural Resources Fund and
(ii) Consumer Products and Services Fund were approved by G.T. Global as the
initial sole shareholder of such Funds' Class A and Class B shares on April 8,
1994 and December 20, 1994, respectively.
Each Plan requires that, at least quarterly, the Directors review the amounts
expended thereunder and the purposes for which such expenditures were made. Each
Plan requires that so long as it is in effect the selection and nomination of
Directors who are not "interested persons" of the Company will be committed to
the discretion of the Directors who are not "interested persons" of the Company,
as defined in the 1940 Act.
As discussed in the Prospectus, G.T. Global collects sales charges on sales of
Class A shares of each Fund, retains certain amounts of such charges and
reallows other amounts of such charges to broker/dealers that sell shares. The
following table reviews the extent of such activity during the Health Care
Fund's last three fiscal years. The sales structure for the period
Statement of Additional Information Page 29
<PAGE>
G.T. GLOBAL THEME FUNDS
January 1, 1993 through March 31, 1993 and for the fiscal years ended October
31, 1992 and 1991 was a sales structure substantially similar to the current
Class A structure:
<TABLE>
<CAPTION>
SALES CHARGES AMOUNT AMOUNTS
YEAR ENDED OCTOBER 31, COLLECTED RETAINED REALLOWED
- -------------------------------------------------------------------------- -------------- ------------- --------------
<S> <C> <C> <C>
1994...................................................................... $ 1,544,456 $ 131,040 $ 1,413,416
1993...................................................................... 1,519,000 181,204 1,337,796
1992...................................................................... 12,116,000 1,174,340 10,941,660
</TABLE>
The following table reviews the extent of such activity during the
Telecommunications Fund's fiscal year ended October 31, 1994 and 1993 and its
fiscal period January 27, 1992 (commencement of operations) to October 31, 1992:
<TABLE>
<CAPTION>
SALES CHARGES AMOUNT AMOUNTS
YEAR ENDED OCTOBER 31, COLLECTED RETAINED REALLOWED
- -------------------------------------------------------------------------- -------------- ------------- --------------
<S> <C> <C> <C>
1994...................................................................... $ 15,634,626 $ 2,477,493 $ 13,157,133
1993...................................................................... 18,545,000 2,002,928 16,542,072
1992 (since Fund inception on
January 27, 1992)........................................................ 19,640,000 611,243 19,028,757
</TABLE>
The following table reviews the extent of such activity for each of the
Financial Services Fund, Infrastructure Fund and Natural Resources Fund for each
Fund's fiscal period May 31, 1994 (commencement of operations) to October 31,
1994:
<TABLE>
<CAPTION>
SALES CHARGES AMOUNT AMOUNTS
MAY 31, 1994 TO OCTOBER 31, 1994 COLLECTED RETAINED REALLOWED
- -------------------------------------------------------------------------- -------------- ------------- --------------
<S> <C> <C> <C>
Financial Services Fund................................................... $ 53,670 $ 4,672 $ 48,998
Infrastructure Fund....................................................... 494,689 51,215 443,474
Natural Resources Fund.................................................... 203,926 14,471 189,455
</TABLE>
G.T. Global receives no compensation or reimbursements relating to its
distribution efforts with respect to the Class A shares other than as described
above. G.T. Global receives any contingent deferred sales charges ("CDSCs")
payable with respect to redemptions of Class B shares. The following table
discloses the amount of CDSCs collected by G.T. Global with regard to the G.T.
Global Theme Funds for the periods shown.
HEALTH CARE FUND
<TABLE>
<CAPTION>
CDSCS COLLECTED
----------------
<S> <C>
Year ended October 31, 1994............................................................................. $ 49,801
Period April 1, 1993 to October 31, 1993................................................................ 2,093
</TABLE>
TELECOMMUNICATIONS FUND
<TABLE>
<CAPTION>
CDSCS COLLECTED
----------------
<S> <C>
Year ended October 31, 1994............................................................................. $ 1,731,244
Period April 1, 1993 to October 31, 1993................................................................ 51,513
</TABLE>
FINANCIAL SERVICES FUND
<TABLE>
<CAPTION>
CDSCS COLLECTED
----------------
<S> <C>
May 31, 1994 (commencement of operations) to October 31, 1994........................................... $ 847
</TABLE>
INFRASTRUCTURE FUND
<TABLE>
<CAPTION>
CDSCS COLLECTED
----------------
<S> <C>
May 31, 1994 (commencement of operations) to October 31, 1994........................................... $ 1,528
</TABLE>
NATURAL RESOURCES FUND
<TABLE>
<CAPTION>
CDSCS COLLECTED
----------------
<S> <C>
May 31, 1994 (commencement of operations) to October 31, 1994........................................... $ 779
</TABLE>
Statement of Additional Information Page 30
<PAGE>
G.T. GLOBAL THEME FUNDS
TRANSFER AGENCY SERVICES
G.T. Services, the Funds' Transfer Agent, has been retained by the Funds to
perform shareholder servicing, reporting and general transfer agent functions
for the Funds. For these services, the Transfer Agent receives an annual
maintenance fee of $17.50 per account, a new account fee of $4.00 per account, a
per transaction fee of $1.75 for all transactions other than exchanges and a per
exchange fee of $2.25. The Transfer Agent is also reimbursed by the Funds for
its out-of-pocket expenses for such items as postage, forms, telephone charges,
stationery and office supplies.
EXPENSES OF THE FUNDS AND OF THE PORTFOLIOS
Each Fund and each Portfolio pays all expenses not assumed by G.T. Capital, G.T.
Global and other agents. These expenses include, in addition to the advisory,
administration, distribution, transfer agency and brokerage fees discussed
above, legal and audit expenses, custodian fees, trustees' fees, organizational
fees, fidelity bond and other insurance premiums, taxes, extraordinary expenses
and expenses of reports and prospectuses sent to existing investors. Certain of
these expenses, such as custodial fees and brokerage fees generally are higher
for non-U.S. securities. The allocation of general Company expenses and expenses
shared among the Funds 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 Funds or the nature of the service performed and
relative applicability to the Funds. 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 each 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 Funds or the
Portfolios generally are higher than the comparable expenses of such other
funds.
- --------------------------------------------------------------------------------
VALUATION OF FUND SHARES
- --------------------------------------------------------------------------------
As described in the Prospectus, each Fund's net asset value per share for each
class of shares is determined each day on which The New York Stock Exchange
("NYSE") is open for business ("Business Day") as of the close of regular
trading on the NYSE (currently 4:00 p.m. Eastern Time, unless weather, equipment
failure or other factors contribute to an earlier closing time). Currently, the
NYSE is closed on weekends and on certain days relating to the following
holidays: New Year's Day, Presidents' Day, Good Friday, Memorial Day, July 4th,
Labor Day, Thanksgiving Day and Christmas Day.
Each Theme Portfolio's 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 OTC market are valued at the last available sale price prior to
the time of valuation. Securities and other assets for which market quotations
are not readily available (including restricted securities that are subject to
limitations as to their sale) are valued at fair value as determined in good
faith by or under the direction of the Portfolios' Board of Trustees or the
Company's Board of Directors, as applicable.
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 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.
Options on indices, securities and currencies purchased by the Theme Portfolios
are valued at their last bid price in the case of listed options or at the
average of the last bid prices obtained from dealers in the case of OTC options.
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 a Theme Portfolio are readily available, those
positions will be valued based upon such quotations.
Securities and other assets for which market quotations are not readily
available are valued at fair value as determined in good faith by or under the
direction of the Portfolios' Board of Trustees or the Company's Board of
Directors, as
Statement of Additional Information Page 31
<PAGE>
G.T. GLOBAL THEME FUNDS
applicable. 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 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 Theme
Portfolios in connection with such disposition). In addition, other factors,
such as the cost of the investment, the market value of any unrestricted
securities of the same class (both at the time of purchase and at the time of
valuation), the size of the holding, the prices of any recent transactions or
offers with respect to such securities and any available analysts' reports
regarding the issuer, generally are considered.
The fair value of any other assets is added to the value of all securities
positions to arrive at the value of each Fund's total assets (which, for each
Feeder Fund is the value of its investment in its corresponding Portfolio). Each
Fund's liabilities, including accruals for expenses, are deducted from its total
assets. Once the total value of a Fund's net assets is so determined, that value
is then divided by the total number of shares outstanding (excluding treasury
shares), and the result, rounded to the nearer cent, is the net asset value per
share.
Any assets or liabilities initially expressed in terms of foreign currencies are
translated into U.S. dollars at the official exchange rate or, alternatively, at
the mean of the current bid and asked prices of such currencies against the U.S.
dollar last quoted by a major bank that is a regular participant in the foreign
exchange market or on the basis of a pricing service that takes into account the
quotes provided by a number of such major banks. If none of these alternatives
are available or none are deemed not to provide a suitable methodology for
converting a foreign currency into U.S. dollars, the Portfolios' Board of
Trustees or the Company's Board of Directors, as applicable, in good faith, will
establish a conversion rate for such currency.
European, Far Eastern, or Latin American securities trading may not take place
on all days on which the NYSE is open. Further, trading takes place in various
foreign markets on days on which the NYSE is not open. Trading in securities on
European and Far Eastern securities exchanges and OTC markets generally is
completed well before the close of business in New York. Consequently, the
calculation of each Fund's net asset value may not always take place
contemporaneously with the determination of the prices of securities held by
each Fund. Events affecting the values of securities held by the Theme
Portfolios that occur between the time their prices are determined and the close
of normal trading on the NYSE will not be reflected in a Fund's net asset value
unless G.T. Capital, under the supervision of the Company's Board of Directors
or the Portfolios' Board of Trustees, as applicable, determines that the
particular event would materially affect net asset value. As a result, a Fund's
net asset value may be significantly affected by such trading on days when a
shareholder has no access to that Fund.
- --------------------------------------------------------------------------------
INFORMATION RELATING TO SALES
AND REDEMPTIONS
- --------------------------------------------------------------------------------
PAYMENT AND TERMS OF OFFERING
Payment for Class A or Class B shares of a Fund 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 canceled due to nonpayment (for example, on account of a check 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 canceled due to nonpayment may be prohibited
from placing future orders.
Each 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 a Fund
until it has been confirmed in writing by the Transfer Agent (or other
arrangements made with the Fund, in the case of orders utilizing wire transfer
of funds, as described above) and payment has been received. To protect existing
shareholders, each Fund reserves the right to reject any offer for a purchase of
shares by any individual.
Statement of Additional Information Page 32
<PAGE>
G.T. GLOBAL THEME FUNDS
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.
AUTOMATIC INVESTMENT PLAN -- CLASS A SHARES AND CLASS B SHARES
To establish participation in the Fund's Automatic Investment Plan ("AIP"),
investors or their broker/dealers should specify whether investment will be in
Class A shares or Class B shares and should send the following documents to the
Transfer Agent: (1) an AIP Application; (2) a Bank Authorization Form; and (3) a
voided personal check from the pertinent bank account. The necessary forms are
provided at the back of the Fund's Prospectus. Provided that an investor's bank
accepts the Bank Authorization Form, investment amounts will be drawn on the
designated dates (monthly on the 25th day or beginning quarterly on the 25th day
of the month the investor first selects) in order to purchase full and
fractional shares of the Fund at the public offering price determined on that
day. In the event that the 25th day falls on a Saturday, Sunday or holiday,
shares will be purchased on the next business day. If an investor's check is
returned because of insufficient funds or a stop payment order or if the account
is closed, the AIP may be discontinued, and any share purchase made upon deposit
of such check may be cancelled. Furthermore, the shareholder will be liable for
any loss incurred by the Fund by reason of such cancellation. Investors should
allow one month for the establishment of an AIP. An AIP may be terminated by the
Transfer Agent or the Fund upon thirty days' written notice or by the
participant at any time without penalty, upon written notice to the Fund or the
Transfer Agent.
LETTER OF INTENT -- CLASS A SHARES
The Letter of Intent ("LOI") is not a binding obligation to purchase the
indicated amount. During such time as Class A shares are held in escrow under an
LOI to ensure payment of applicable sales charges if the indicated amount is not
met, all dividends and capital gain distributions on escrowed shares will be
reinvested in additional Class A shares shares or paid in cash, as specified by
the shareholder. If the intended investment is not completed within the
specified thirteen-month period, the purchaser must remit to G.T. Global the
difference between the sales charge actually paid and the sales charge which
would have been applicable if the total Class A purchases had been made at a
single time. If this amount is not paid to G.T. Global within twenty days after
written request, the appropriate number of escrowed shares will be redeemed and
the proceeds paid to G.T. Global.
A registered investment adviser, trust company or trust department seeking to
execute an LOI as a single purchaser with respect to accounts over which it
exercises investment discretion is required to provide the Transfer Agent with
information establishing that it has discretionary authority with respect to the
money invested (e.g., by providing a copy of the pertinent investment advisory
agreement). Class A shares purchased in this manner must be registered with the
Transfer Agent so that only the investment adviser, trust company or trust
department, and not the beneficial owner, will be able to place purchase,
redemption and exchange orders.
INDIVIDUAL RETIREMENT ACCOUNTS (IRA)
Class A or Class B shares of a Fund may also be purchased as the underlying
investment for an IRA meeting the requirements of section 408(a) of the Internal
Revenue Code of 1986, as amended ("Code"). IRA applications are available from
brokers or G.T. Global.
EXCHANGES BETWEEN FUNDS
Shares of a 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. Class A shares of a
Fund may be exchanged only for Class A shares of other G.T. Global Mutual Funds.
Class B shares of a Fund may be exchanged only for Class B 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 privilege may be discontinued or changed at any
time by any of the funds upon sixty days prior written notice to the
shareholders of such fund and is available only in states where the exchange may
be made legally. Before purchasing shares through the exercise of the exchange
privilege, a shareholder should obtain and read a copy of the prospectus of the
fund to be purchased and should consider the investment objective(s) of 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
Statement of Additional Information Page 33
<PAGE>
G.T. GLOBAL THEME FUNDS
least $1,000. Costs in connection with the administration of this service,
including wire charges, currently are borne by that Fund. Proceeds of less than
$1,000 will be mailed to the shareholder's registered address of record. The
Funds and the Transfer Agent reserve the right to refuse any telephone
instructions and may discontinue the aforementioned redemption options upon
thirty days' written notice.
SYSTEMATIC WITHDRAWAL PLAN
Shareholders owning Class A or Class B shares of a Fund with a value of $10,000
or more may establish a Systematic Withdrawal Plan ("SWP"). Under an SWP, a
shareholder will receive monthly or quarterly payments, in amounts of not less
than $100 per payment, through the automatic redemption of the necessary number
of shares on the designated dates (monthly on the 25th day or quarterly on the
25th day of January, April, July and October). In the event that the 25th day
falls on a Saturday, Sunday or holiday, the redemption will take place on the
prior business day. Certificates, if any, for the shares being redeemed must be
held by the Transfer Agent. Checks will be made payable to the designated
recipient and mailed within seven days. If the recipient is other than the
registered shareholder, the signature of each shareholder must be guaranteed on
the SWP application (see "How to Redeem Shares" in the Prospectus). A
corporation (or partnership) must also submit a "Corporation Resolution" (or
"Certificate of Partnership") indicating the names, titles, and signatures of
the individuals authorized to act on its behalf, and the SWP application must be
signed by a duly authorized officer(s) and the corporate seal affixed.
With respect to an SWP established in Class B shares only, the maximum annual
SWP withdrawal is 12% of the initial account value. Withdrawals in excess of 12%
of the initial account value annually may result in assessment of a contingent
deferred sales charge. See "How to Invest" in the Prospectus.
Shareholders should be aware that such systematic withdrawals may deplete or use
up entirely the initial investment and result in realized long-term or
short-term capital gains or losses. The SWP may be terminated at any time by the
Transfer Agent or the Fund upon thirty days' written notice or by a shareholder
upon written notice to the Fund or its Transfer Agent. Applications and further
details regarding establishment of an SWP are provided at the back of the Fund's
Prospectus.
SUSPENSION OF REDEMPTION PRIVILEGES
Each 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 would prohibit the Funds or the Portfolios
from disposing of portfolio securities owned by them 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 a Fund to
pay for all redemptions in cash. In such cases, the Board may authorize payment
to be made in portfolio securities or other property of a Fund, so called
"redemptions in kind." Payment of redemptions in kind will be made in readily
marketable securities. Such securities would be valued at the same value
assigned to them in computing the net asset value per share. Shareholders
receiving such securities would incur brokerage costs in selling any such
securities so received. However, despite the foregoing, the Company has filed
with the SEC an election pursuant to Rule 18f-1 under the 1940 Act. This means
that each Fund will pay in cash all requests for redemption made by any
shareholder of record, limited in amount with respect to each shareholder during
any ninety-day period to the lesser of $250,000 or 1% of the net asset value of
a 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 34
<PAGE>
G.T. GLOBAL THEME FUNDS
TAXES
- --------------------------------------------------------------------------------
TAXATION OF THE FUNDS
Each Fund is treated as a separate corporation for federal income tax purposes.
In order to qualify or continue to qualify for treatment as a regulated
investment company ("RIC") under the Code, each Fund must distribute to its
shareholders for each taxable year at least 90% of its investment company
taxable income (consisting generally of net investment income, net short-term
capital gain and net gains from certain foreign currency transactions)
("Distribution Requirement") and must meet several additional requirements. With
respect to each Fund, these requirements include the following: (1) the Fund
must derive at least 90% of its gross income each taxable year from dividends,
interest, payments with respect to securities loans and gains from the sale or
other disposition of securities or foreign currencies, or other income
(including gains from options, Futures or Forward Contracts) derived with
respect to its business of investing in securities or those currencies ("Income
Requirement"); (2) the Fund must derive less than 30% of its gross income each
taxable year from the sale or other disposition of securities, or any of the
following, that were held for less than three months -- options or Futures
(other than those on foreign currencies), or foreign currencies (or options,
Futures or Forward Contracts thereon) that are not directly related to the
Fund's principal business of investing in securities (or options and Futures
with respect to securities) ("Short-Short Limitation"); (3) at the close of each
quarter of the Fund's taxable year, at least 50% of the value of its total
assets must be represented by cash and cash items, U.S. government securities,
securities of other RICs and other securities, with these other securities
limited, 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. Each Feeder Fund, as an
investor in its corresponding Portfolio, is deemed to own a proportionate share
of the Portfolio's assets, and to earn a proportionate share of the Portfolio's
income, for purposes of determining whether the Fund satisfies all the
requirements described above to qualify as a RIC.
Each Fund will be subject to a nondeductible 4% excise tax ("Excise Tax") to the
extent it fails to distribute by the end of any calendar year substantially all
of its ordinary income for that year and capital gain net income for the
one-year period ending on October 31 of that year, plus certain other amounts.
See the next section for a discussion of the tax consequences to each Feeder
Fund of hedging transactions engaged in, and investments in passive foreign
investment companies ("PFICs") and other foreign securities by, its
corresponding Portfolio.
TAXATION OF THE PORTFOLIOS
Each Portfolio is treated as a separate partnership for federal income tax
purposes and is not a "publicly traded partnership." As a result, each Portfolio
is not subject to federal income tax; instead, each Feeder Fund, as an investor
in its corresponding Portfolio, is required to take into account in determining
its federal income tax liability its share of the Portfolio's income, gains,
losses, deductions and credits, without regard to whether it has received any
cash distributions from the Portfolio. Each Portfolio also is not subject to New
York income or franchise tax.
Because, as noted above, each Feeder Fund is deemed to own a proportionate share
of its corresponding Portfolio's assets, and to earn a proportionate share of
its corresponding Portfolio's income, for purposes of determining whether the
Fund satisfies the requirements to qualify as a RIC, each such Portfolio intends
to conduct its operations so that its corresponding Fund will be able to satisfy
all those requirements.
Distributions to each Feeder Fund from its corresponding Portfolio (whether
pursuant to a partial or complete withdrawal or otherwise) will not result in
the Fund's recognition of any gain or loss for federal income tax purposes,
except that (1) gain will be recognized to the extent any cash that is
distributed exceeds the Fund's basis for its interest in its corresponding
Portfolio before the distribution, (2) income or gain will be recognized if the
distribution is in liquidation of the Fund's entire interest in its
corresponding Portfolio and includes a disproportionate share of any unrealized
receivables held by the Portfolio, and (3) loss will be recognized if a
liquidation distribution consists solely of cash and/or unrealized receivables.
Each Feeder Fund's basis for its interest in its corresponding Portfolio
generally will equal the
Statement of Additional Information Page 35
<PAGE>
G.T. GLOBAL THEME FUNDS
amount of cash and the basis of any property the Fund invests in the Portfolio,
increased by the Fund's share of the Portfolio's net income and gains and
decreased by (a) the amount of cash and the basis of any property the Portfolio
distributes to the Fund and (b) the Fund's share of the Portfolio's losses.
FOREIGN TAXES. Dividends and interest received by a Theme Portfolio 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 a Fund's total assets (taking into account, in the case of a
Feeder Fund, its proportionate share of its corresponding Portfolio's 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 (taking into account, in the case of a Feeder Fund, its proportionate
share of those taxes paid by its corresponding Portfolio). Pursuant to the
election, a Fund will treat those taxes as dividends paid to its shareholders
and each shareholder will be required to (1) include in gross income, and treat
as paid by him, his proportionate share of those taxes, (2) treat his share of
those taxes and of any dividend paid by the Fund that represents income from
foreign sources as his own income from those sources, and (3) either deduct the
taxes deemed paid by him in computing his taxable income or, alternatively, use
the foregoing information in calculating the foreign tax credit against his
federal income tax. Each Fund will report to its shareholders shortly after each
taxable year their respective shares of the Fund's income (taking into account,
in the case of a Feeder Fund, its proportionate share of its corresponding
Portfolio's income) from sources within, and taxes paid to, foreign countries
and U.S. possessions if it makes this election.
PASSIVE FOREIGN INVESTMENT COMPANIES. Each Theme Portfolio may invest in the
stock of PFICs. A PFIC is a foreign corporation that, in general, meets either
of the following tests: (1) at least 75% of its gross income is passive or (2)
an average of at least 50% of its assets produce, or are held for the production
of, passive income. Under certain circumstances, a Fund will be subject to
federal income tax on a part (or, in the case of a Feeder Fund, its
proportionate share of a part) of any "excess distribution" received by it (or,
in the case of a Feeder Fund, by its corresponding Portfolio) on the stock of a
PFIC or of any gain on the Fund's (or, in the case of a Feeder Fund, its
corresponding Portfolio's) disposition of that stock (collectively, "PFIC
income"), plus interest thereon, even if the Fund distributes the PFIC income as
a taxable dividend to its shareholders. The balance of the PFIC income will be
included in the Fund's investment company taxable income and, accordingly, will
not be taxable to it to the extent that income is distributed to its
shareholders.
If a Theme Portfolio invests in a PFIC and elects to treat the PFIC as a
"qualified electing fund" ("QEF"), then in lieu of the foregoing tax and
interest obligation, the Theme Portfolio (or, in the case of a Portfolio, its
corresponding Feeder Fund) will be required to include in income each year its
pro rata share of the QEF's annual ordinary earnings and net capital gain (the
excess of net long-term capital gain over net short-term capital loss) -- which
most likely would have to be distributed by that Theme Portfolio (or, in the
case of a Portfolio, its corresponding Feeder Fund) to satisfy the Distribution
Requirement and to avoid imposition of the Excise Tax -- even if those earnings
and gain were not received thereby. In most instances it will be very difficult,
if not impossible, to make this election because of certain requirements
thereof.
The "Tax Simplification 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 will be enacted into law.
Pursuant to proposed regulations, open-end RICs, such as the Funds, would be
entitled to elect to "mark-to-market" their stock in certain PFICs.
"Marking-to-market," in this context, means recognizing as gain for each taxable
year the excess, as of the end of that year, of the fair market value of each
such PFIC's stock over the adjusted basis in that stock (including
mark-to-market gain for each prior year for which an election was in effect).
OPTIONS, FUTURES AND FOREIGN CURRENCY TRANSACTIONS. The Theme Portfolios'
use of hedging transactions, such as selling (writing) and purchasing options
and Futures and entering into Forward Contracts, involves complex rules that
will determine, for federal income tax purposes, the character and timing of
recognition of the gains and losses a Theme Portfolio 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 a Theme Portfolio with respect to its
business of investing in securities or foreign currencies, will qualify as
permissible income under the Income Requirement for that Theme Portfolio (or, in
the case of a Portfolio, its corresponding Feeder Fund). However, income from
the disposition by a Theme Portfolio of options and Futures (other than those on
foreign
Statement of Additional Information Page 36
<PAGE>
G.T. GLOBAL THEME FUNDS
currencies) will be subject to the Short-Short Limitation for that Theme
Portfolio (or, in the case of a Portfolio, its corresponding Feeder Fund) if
they are held for less than three months. Income from the disposition by a Theme
Portfolio of foreign currencies, and options, Futures and Forward Contracts on
foreign currencies, that are not directly related to its principal business of
investing in securities (or options and Futures with respect thereto) also will
be subject to the Short-Short Limitation for that Theme Portfolio (or, in the
case of a Portfolio, its corresponding Feeder Fund) if they are held for less
than three months.
If a Theme Portfolio satisfies certain requirements, any increase in value of a
position that is part of a "designated hedge" will be offset by any decrease in
value (whether realized or not) of the offsetting hedging position during the
period of the hedge for purposes of determining whether that Theme Portfolio
(or, in the case of a Portfolio, its corresponding Feeder Fund) satisfies the
Short-Short Limitation. Thus, only the net gain (if any) from the designated
hedge will be included in gross income for purposes of that limitation. Each
Theme Portfolio intends that, when it engages in hedging transactions, it will
qualify for this treatment, but at the present time it is not clear whether this
treatment will be available for all of those transactions. To the extent this
treatment is not available, a Theme Portfolio may be forced to defer the closing
out of certain options, Futures, Forward Contracts on foreign currency positions
beyond the time when it otherwise would be advantageous to do so, in order for
that Theme Portfolio (or, in the case of a Portfolio, its corresponding Feeder
Fund) to qualify or continue to qualify as a RIC.
Futures and Forward Contracts that are subject to section 1256 of the Code
(other than those that are part of a "mixed straddle") ("Section 1256
Contracts") and that are held by a Theme Portfolio at the end of its taxable
year generally will be deemed to have been sold at market value for federal
income tax purposes. Sixty percent of any net gain or loss recognized on these
deemed sales, and 60% of any net 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 or 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. Each Theme Portfolio attempts
to monitor Section 988 transactions to minimize any adverse tax impact.
TAXATION OF THE FUNDS' SHAREHOLDERS
Dividends and other distributions declared by a Fund in, and payable to
shareholders of record as of a date in, October, November or December of any
year will be deemed to have been paid by the Fund and received by the
shareholders on December 31 of that year if the distributions are paid by the
Fund during the following January. Accordingly, those distributions will be
taxed to shareholders for the year in which that December 31 falls.
A portion of the dividends from a Fund's investment company taxable income
(whether paid in cash or reinvested in additional shares) may be eligible for
the dividends-received deduction allowed to corporations. The eligible portion
may not exceed the aggregate dividends received by a Fund (directly or through a
Portfolio) from U.S. corporations. However, dividends received by a corporate
shareholder and deducted by it pursuant to the dividends-received deduction may
be subject indirectly to the alternative minimum tax.
If Fund shares are sold at a loss after being held for six months or less, the
loss will be treated as long-term, instead of short-term, capital loss to the
extent of any capital gain distributions received on those shares. Investors
also should be aware that if shares are purchased shortly before the record date
for any dividend or other distribution, the shareholder will pay full price for
the shares and receive some portion of the price back as a taxable distribution.
Dividends paid by a Fund to a shareholder who, as to the United States, is a
nonresident alien individual or 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 a Fund to a foreign shareholder
is "effectively connected with the conduct of a U.S. trade or business," in
which case the reporting and withholding requirements applicable to domestic
shareholders will apply. 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.
The foregoing is a general and abbreviated summary of certain federal income tax
considerations affecting the Funds, their shareholders and the Portfolios.
Investors are urged to consult their own tax advisers for more detailed
information and for information regarding any foreign, state and local taxes
applicable to distributions received from a Fund.
Statement of Additional Information Page 37
<PAGE>
G.T. GLOBAL THEME FUNDS
ADDITIONAL INFORMATION
- --------------------------------------------------------------------------------
BIL GT GROUP
Other subsidiaries of the BIL GT Group include the Bank of 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.
THE COMPANY
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.
CUSTODIAN
State Street Bank and Trust Company ("State Street"), 225 Franklin Street,
Boston, Massachusetts 02110, acts as custodian of the Theme Portfolios' assets.
State Street is authorized to establish and has established separate accounts in
foreign currencies and to cause securities of the Theme Portfolios to be held in
separate accounts outside the United States in the custody of non-U.S. banks.
INDEPENDENT ACCOUNTANTS
The Company's and Global Investment Portfolio's independent accountants are
Coopers & Lybrand, L.L.P., One Post Office Square, Boston, Massachusetts 02109.
Coopers & Lybrand, L.L.P. conducts annual audits of the Portfolios' and the
Funds' financial statements, assists in the preparation of each Portfolio's and
each Fund's federal and state income tax returns and consults with the Company
and Global Investment Portfolio 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 is 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 at any time, or to grant the use of such name to any other company.
Statement of Additional Information Page 38
<PAGE>
G.T. GLOBAL THEME FUNDS
INVESTMENT RESULTS
- --------------------------------------------------------------------------------
Each 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 each 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)(n) = 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
Standardized Returns for the Class A shares of Health Care Fund and
Telecommunications Fund, stated as average annualized total returns for the
periods shown, were as follows:
<TABLE>
<CAPTION>
HEALTH CARE TELECOMMUNI-
PERIOD FUND CATIONS FUND
- -------------------------------------------------- ----------- ------------
<S> <C> <C>
Fiscal year ended October 31, 1994................ 4.88% 1.94%
January 27, 1992 through October 31, 1994......... n/a 16.61%
November 1, 1989 through October 31, 1994......... 10.39% n/a
August 7, 1989 through October 31, 1994........... 10.63% n/a
</TABLE>
The Standardized Returns for the Class B Shares of the Health Care Fund and
Telecommunications Fund, which were first offered April 1, 1993, stated as
aggregate returns for the periods shown, were:
<TABLE>
<CAPTION>
HEALTH CARE TELECOMMUNI-
PERIOD FUND CATIONS FUND
- -------------------------------------------------- ------------ ------------
<S> <C> <C>
Fiscal year ended October 31, 1994................ 4.55% 1.50%
April 1, 1993 through October 31, 1993............ 12.84% 22.39%
</TABLE>
As discussed in the Prospectus, each 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 Non-Standardized Returns for the Class A
shares of the Health Care Fund and Telecommunications Fund, stated as aggregate
total returns for the periods shown, were:
<TABLE>
<CAPTION>
HEALTH CARE TELECOMMUNI-
PERIOD FUND CATIONS FUND
- -------------------------------------------------- ------------ ------------
<S> <C> <C>
Fiscal year ended October 31, 1994................ 10.11% 7.02%
January 27, 1992 through October 31, 1994......... n/a 60.50%
August 7, 1989 through October 31, 1994........... 78.16% n/a
</TABLE>
The Non-Standardized Returns for the Class B shares of the Health Care Fund and
Telecommunications Fund, which were first offered on April 1, 1993, stated as
aggregate total returns for the periods shown, were:
<TABLE>
<CAPTION>
HEALTH CARE TELECOMMUNI-
PERIOD FUND CATIONS FUND
- -------------------------------------------------- ------------ ------------
<S> <C> <C>
Fiscal year ended October 31, 1994................ 9.55% 6.50%
April 1, 1993 through October 31, 1993............ 25.07% 41.70%
</TABLE>
The Non-Standardized Returns for the Class A shares of the Health Care Fund and
Telecommunications Fund, stated as average annualized total returns for the
periods shown, were as follows:
<TABLE>
<CAPTION>
HEALTH CARE TELECOMMUNI-
PERIOD FUND CATIONS FUND
- -------------------------------------------------- ------------ ------------
<S> <C> <C>
Fiscal year ended October 31, 1994................ 10.11% 7.02%
January 27, 1992 through October 31, 1994......... n/a 18.69%
November 1, 1989 through October 31, 1994......... 11.47% n/a
August 7, 1989 through October 31, 1994........... 11.66% n/a
</TABLE>
Statement of Additional Information Page 39
<PAGE>
G.T. GLOBAL THEME FUNDS
The Non-Standardized Returns for the Class B shares of the Health Care Fund and
Telecommunications Fund, stated as average annualized total returns for the
periods shown, were as follows:
<TABLE>
<CAPTION>
HEALTH CARE TELECOMMUNI-
PERIOD FUND CATIONS FUND
- -------------------------------------------------- ------------ ------------
<S> <C> <C>
Fiscal year ended October 31, 1994................ 9.55% 6.50%
April 1, 1993 through October 31, 1993............ 15.18% 24.62%
</TABLE>
The Financial Services Fund, Infrastructure Fund and Natural Resources Fund
Standardized Returns for their Class A shares, stated as aggregate total returns
at October 31, 1994, were as follows:
<TABLE>
<CAPTION>
FINANCIAL SERVICES INFRASTRUCTURE NATURAL RESOURCES
PERIOD FUND FUND FUND
- -------------------------------------------------- ------------------ -------------- -----------------
<S> <C> <C> <C>
May 31, 1994 through October 31, 1994............. (3.17)% 3.92% 3.42%
</TABLE>
The Financial Services Fund, Infrastructure Fund and Natural Resources Fund
Standardized Returns for their Class B shares, stated as aggregate total returns
at October 31, 1994, were as follows:
<TABLE>
<CAPTION>
FINANCIAL SERVICES INFRASTRUCTURE NATURAL RESOURCES
PERIOD FUND FUND FUND
- -------------------------------------------------- ------------------ -------------- -----------------
<S> <C> <C> <C>
May 31, 1994 through October 31, 1994............. (3.51)% 3.92% 3.31%
</TABLE>
The Non-Standardized Returns for the Class A shares of Financial Services Fund,
Infrastructure Fund and Natural Resources Fund, stated as aggregate total
returns at October 31, 1994, were as follows:
<TABLE>
<CAPTION>
FINANCIAL SERVICES INFRASTRUCTURE NATURAL RESOURCES
PERIOD FUND FUND FUND
- -------------------------------------------------- ------------------ -------------- -----------------
<S> <C> <C> <C>
May 31, 1994 through October 31, 1994............. 1.66% 9.10% 8.57%
</TABLE>
The Non-Standardized Returns for the Class B shares of Financial Services Fund,
Infrastructure Fund and Natural Resources Fund, stated as aggregate total
returns at October 31, 1994, were as follows:
<TABLE>
<CAPTION>
FINANCIAL SERVICES INFRASTRUCTURE NATURAL RESOURCES
PERIOD FUND FUND FUND
- -------------------------------------------------- ------------------ -------------- -----------------
<S> <C> <C> <C>
May 31, 1994 through October 31, 1994............. 1.49% 8.92% 8.31%
</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.
Each Fund's investment results will vary from time to time depending upon market
conditions, the composition of each Fund's portfolio and operating expenses of
each Fund, so that current or past yield or total return should not be
considered representative of what an investment in each Fund may earn in any
future period. These factors and possible differences in the methods used in
calculating investment results should be considered when comparing each Fund's
investment results with those published for other investment companies and other
investment vehicles. Each Fund's results also should be considered relative to
the risks associated with such Fund's investment objective and policies. Each
Fund will include performance data for all classes of that Fund in any
advertisement or information including performance data for each Fund.
IMPORTANT POINTS TO NOTE ABOUT THE FOLLOWING WORLD FINANCIAL AND ECONOMIC DATA
The following information is based on sources believed to be reliable, but which
may be subject to revision and which has not been independently verified by the
Company or G.T. Global. 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 this information may be useful to investors
considering whether and to what extent to diversify their investments through
the purchase of mutual funds investing in securities on a global basis. However,
this data is not a representation of the past performance of any of these Funds,
nor is it a prediction of such performance. The performance of the Funds will
differ from the historical performance of the indices represented above. The
performance of indices does not take expenses into account, while each Fund
incurs expenses in its operations, which will reduce performance. Each Fund is
actively managed, I.E., G.T. Capital, as each Fund's investment manager,
actively purchases and sells securities in
Statement of Additional Information Page 40
<PAGE>
G.T. GLOBAL THEME FUNDS
seeking each Fund's investment objective. Moreover, each Fund may invest a
portion of its assets in corporate bonds, while the below data relates only to
government bonds. Each of these factors will cause the performance of each Fund
to differ from the indices shown below.
Each 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 Hutton 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,
Inc. ("Moody's") or BBB by Standard and Poor's Ratings Group ("S&P"), or, in
the case of nonrated bonds, BBB by Fitch Investors Service (excluding
collateralized mortgage obligations).
(3) The Consumer Price Index, which is a measure of the average change
in prices over time in a fixed market basket of goods and services (e.g.,
food, clothing, shelter, fuels, transportation fares, charges for doctors'
and dentists' services, prescription medicines, and other goods and services
that people buy for day-to-day living). There is inflation risk which does
not affect a security's value but its purchasing power i.e. the risk of
changing price levels in the economy that affects security prices or the
price of goods and services.
(4) Data and mutual fund rankings published or prepared by Lipper
Analytical Data Services, Inc. ("Lipper"), CDA/Wiesenberger Investment
Company Services ("CDA/Wiesenberger"), Morningstar, Inc. and/or other
companies that rank and/or compare mutual funds by overall performance,
investment objectives, assets, expense levels, periods of existence and/or
other factors. In this regard each Fund may be compared to the Fund's "peer
group" as defined by Lipper, CDA/Wiesenberger, Morningstar and/or other
firms, as applicable, or to specific funds or groups of funds within or
outside of such peer group. Lipper generally ranks funds on the basis of
total return, assuming reinvestment of distributions, but does not take
sales charges or redemption fees into consideration, and is prepared without
regard to tax consequences. In addition to the mutual fund rankings, the
Fund's performance may be compared to mutual fund performance indices
prepared by Lipper. Morningstar is a mutual fund rating service that also
rates mutual funds on the basis of risk-adjusted performance. Morningstar
ratings are calculated from a fund's three, five and ten year average annual
returns with appropriate fee adjustments and a risk factor that reflects
fund performance relative to the three-month U.S. Treasury bill monthly
returns. Ten percent of the funds in an investment category receive five
stars and 22.5% receive four stars. The ratings are subject to change each
month.
(5) 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.
(6) Ibbottson Associates International Bond Index, which provides a
detailed breakdown of local market and currency returns since 1960.
(7) Standard & Poor's 500 Composite Stock Price Index which is a widely
recognized index composed of the capitalization-weighted average of the
price of 500 of the largest publicly traded stocks in the United States.
(8) Salomon Brothers Broad Investment Grade Index which is a widely used
index composed of U.S. domestic government, corporate and mortgage-backed
fixed income securities.
(9) Dow Jones Industrial Average.
(10) CNBC/Financial News Composite Index.
(11) Morgan Stanley Capital International World Indices, including, among
others, the Morgan Stanley Capital International Europe, Australia, Far East
Index ("EAFE Index"). The EAFE index is an unmanaged index of more than
1,000 companies of Europe, Australia and the Far East.
(12) Salomon Brothers World Government Bond Index and Salomon Brothers
World Government Bond Index-Non-U.S. are each a widely used index composed
of world government bonds.
(13) The World Bank Publication of Trends in Developing Countries (TIDE).
TIDE provides brief reports on most of the World Bank's borrowing members.
The World Development Report is published annually and looks at global and
regional economic trends and their implications for the developing
economies.
Statement of Additional Information Page 41
<PAGE>
G.T. GLOBAL THEME FUNDS
(14) Salomon Brothers Global Telecommunications Index is composed of
telecommunications companies in the developing and emerging countries.
(15) Datastream and Worldscope each is an on-line database retrieval
service for information including, but not limited to, international
financial and economic data.
(16) International Financial Statistics, which is produced by the
International Monetary Fund.
(17) Various publications and annual reports, produced by the World Bank
and its affiliates.
(18) Various publications from the International Bank for Reconstruction
and Development.
(19) Various publications including, but not limited to ratings agencies
such as Moody's Investors Services, Inc., Fitch Investor's Service, Inc.,
Standard & Poor's Ratings Group.
(20) Wilshire Associates which is an on-line database for international
financial and economic data including performance measure for a wide range
of securities.
(21) Bank Rate National Monitor Index, which an average of the quoted
rates for 100 leading banks and thrifts in ten U.S. cities.
(22) International Finance Corporation (IFC) Emerging Markets Data Base
which provides detailed statistics on stock and bond markets in developing
countries.
(23) Various publications from the Organization for Economic Cooperation
and Development ("OECD").
(24) Average of Savings Accounts, which is a measure of all kinds of
savings deposits, including longer-term certificates (based on figures
supplied by the U.S. League of Savings Institutions). Savings accounts offer
a guaranteed rate of return on principal, but no opportunity for capital
growth. During a portion of the period, the maximum rates paid on some
savings deposits were fixed by law.
Indices, economic and financial data prepared by the research departments of
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, G.T.
Global may use performance rankings, ratings and commentary reported
periodically in national financial publications, including 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 in the future.
From time to time, each Fund and G.T. Global may refer to the number of
shareholders in the Funds or the aggregate number of shareholders in all G.T.
Global Mutual Funds or the dollar amount of each Fund's assets under management
or rankings by DALBAR Surveys, Inc. with respect to mutual fund shareholder
services in advertising materials.
G.T. Global believes each Fund is an appropriate investment for long-term
investment goals including, but not limited to funding retirement, paying for
education or purchasing a house. 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. Each
Fund does not represent a complete investment program and the investors should
consider each Fund as appropriate for a portion of their overall investment
portfolio with regard to their long-term investment goals. There is no assurance
that any such information will lead to achieving these goals or guarantee future
results.
From time to time, G.T. Global may refer to or advertise the names of U.S. and
non-U.S. companies and their products although there can be no assurance that
any G.T. Global Mutual Fund may own the securities of these companies.
Ibbotson Associates of Chicago, Illinois (Ibbotson) provides historical returns
of the capital markets in the United States, including common stocks, small
capitalization stocks, long-term corporate bonds, intermediate-term government
bonds, long-term government bonds, Treasury bills, the U.S. rate of inflation
(based on the CPI), and combinations of various capital markets. The performance
of these capital markets are based on the returns of different indices.
Statement of Additional Information Page 42
<PAGE>
G.T. GLOBAL THEME FUNDS
G.T. Global Mutual Funds may use the performance of these capital markets in
order to demonstrate general risk-versus-reward investment scenarios.
Performance comparisons may also include the value of a hypothetical investment
in any of these capital markets. The risks associated with the security types in
any capital market may or may not correspond directly to those of the funds.
Ibbotson calculates total returns in the same method as the funds. The funds may
also compare performance to that of other compilations or indices that may be
developed and made available in the future.
Each Fund may quote various measures of volatility and benchmark correlation
such as beta, standard deviation and R(2) in advertising. In addition, each Fund
may compare these measures to those of other funds. Measures of volatility seek
to compare each Fund's historical share price fluctuations or total returns
compared to those of a benchmark. All measures of volatility and correlation are
calculated using averages of historical data.
Each Fund may advertise examples of the effects of periodic investment plans,
including the principle of dollar cost averaging programs. In such a program, an
investor invests a fixed dollar amount in a fund at periodic intervals, thereby
purchasing fewer shares when prices are high and more shares when prices are
low. While such a strategy does not assure a profit or guard against loss in a
declining market, the investor's average cost per share can be lower than if
fixed numbers of shares are purchased at the same intervals. In evaluating such
a plan, investors should consider their ability to continue purchasing shares
through periods of low price levels.
Each Fund may be available for purchase through retirement plans 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.
Each Fund may describe in its sales material and advertisements how an investor
may invest in the G.T. Global Mutual Funds through various retirement accounts
and plans that offer deferral of income taxes on investment earnings and may
also enable an investor to make pre-tax contributions. Because of their
advantages, these retirement accounts and plans may produce returns superior to
comparable non-retirement investments. The Funds may also discuss these accounts
and 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 roll over (or make a direct transfer of) their
distribution to a Rollover IRA. These accounts can also receive rollovers or
transfers from an existing IRA. If an "eligible 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 roll over 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 organizations 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 materials and advertising discuss
the risks inherent in investing. The major types of investment risk are market
risk, industry risk, credit risk, interest rate risk and inflation risk. Risk
represents the
Statement of Additional Information Page 43
<PAGE>
G.T. GLOBAL THEME FUNDS
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
data regarding industries, individual countries, regions, world stock exchanges,
and economic and demographic statistics from sources G.T. Global deems reliable,
including the economic and financial data of the referenced financial
organizations such as:
1) Stock market capitalization: Morgan Stanley Capital International World
Indices, International Finance Corporation 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.
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: OECD 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).
From time to time, G.T. Global may include in its advertisement and sales
material, information about privatization which is an economic process involving
the sale of state-owned companies to the private sector.
In advertising and sales materials, 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 and income potential.
Statement of Additional Information Page 44
<PAGE>
G.T. GLOBAL THEME FUNDS
HISTORICAL WORLD BOND PERFORMANCE
The following chart shows the yield to maturity (including future interest
payments and principal repayment at par) of 10 year government bonds, as priced
by Salomon Brothers, Inc. This data is based on U.S. dollar values on December
31 of the years shown. The actual total returns of foreign bonds held to
maturity will differ depending on exchange rates during a bond's life.
GOVERNMENT BONDS
YEAR-END YIELDS TO MATURITY
<TABLE>
<CAPTION>
U.S. Canada Germany Japan U.K. Switz. Neth. France Austl.
----- ------ ------- ----- ----- ------ ----- ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1994.......................... 7.82 9.14 7.62 4.54 8.71 5.22 7.75 8.27 9.99
1993.......................... 6.35 6.61 5.54 3.18 6.39 4.06 5.56 5.60 6.68
1992.......................... 6.67 7.95 7.27 4.70 8.16 5.85 7.29 8.09 8.95
1991.......................... 6.70 8.26 7.92 5.51 9.80 6.30 8.33 8.40 9.35
1990.......................... 8.09 10.27 8.70 6.53 10.93 6.37 8.98 10.00 12.04
1989.......................... 7.90 9.63 7.27 5.57 10.58 5.67 7.59 8.93 12.93
1988.......................... 9.19 10.17 6.54 4.70 10.07 4.11 6.46 8.43 12.85
1987.......................... 8.86 10.09 6.56 4.90 9.65 3.74 6.74 9.82 12.84
1986.......................... 7.23 8.75 6.05 5.30 10.54 4.32 6.25 8.87 13.27
1985.......................... 9.01 9.65 6.28 6.18 10.96 4.46 6.81 10.10 14.86
1984.......................... 11.52 11.58 7.00 6.76 11.16 4.65 7.72 12.70 13.50
</TABLE>
The following charts show total returns as of December 31 for the years 1985
through 1994, on bonds issued by various governments. All returns are calculated
in U.S. dollars and include reinvestment of gross yields, and do not assure
deduction of any withholding taxes. These charts were prepared by G.T. Capital
based on Salomon Brothers, Inc. indexes of government bonds with remaining
maturities of at least one year. The time periods shown were generally a period
of decreasing interest rates and increasing market prices for global fixed
income securities.
GOVERNMENT BONDS
ANNUAL TOTAL RETURNS
<TABLE>
<CAPTION>
AUSTRALIA BELGIUM CANADA FRANCE GERMANY ITALY JAPAN UK USA
--------- ------- ------ ------ ------- ------- ------- ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1994...................................... 6.88% 12.22% -9.86% 4.37% 9.98% 4.57% 8.88% -1.54% -3.36%
1993...................................... 15.66% 4.00% 12.01% 13.15% 6.70% 11.08% 27.58% 19.53% 10.69%
1992...................................... -0.26% 7.64% -0.42% 4.27% 5.94% -13.88% 10.84% -4.12% 7.21%
1991...................................... 23.49% 10.89% 21.59% 12.51% 9.75% 13.24% 22.46% 12.65% 15.30%
1990...................................... 16.24% n/a 7.69% 23.52% 16.36% n/a 7.83% 30.88% 8.62%
1989...................................... 5.62% n/a 16.23% 9.14% 6.35% n/a -14.26% -3.91% 14.40%
1988...................................... 28.80% n/a 19.41% 1.63% -7.12% n/a 3.04% 2.44% 7.07%
1987...................................... 28.99% n/a 10.00% 26.58% 29.38% n/a 38.12% 46.61% 1.93%
1986...................................... 16.64% n/a 15.72% 34.09% 37.17% n/a 40.09% 14.77% 15.73%
1985...................................... -12.06% n/a 14.80% 50.51% 43.02% n/a 36.85% 40.18% 20.94%
10 Year Average Annualized Returns from 12/85-12/94
12.28% N/A 10.32% 17.10% 14.81% N/A 16.88% 14.47% 9.64%
<FN>
- --------------
Source: Salomon Brothers, Inc. Countries Identified As "N/A" Were Not Part of
the Salomon Brothers World Government Bond Index During the Years Indicated.
</TABLE>
Statement of Additional Information Page 45
<PAGE>
G.T. GLOBAL THEME FUNDS
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 46
<PAGE>
G.T. GLOBAL THEME FUNDS
From time to time, each 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 47
<PAGE>
G.T. GLOBAL THEME FUNDS
From time to time, each 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 48
<PAGE>
G.T. GLOBAL THEME FUNDS
<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.
Statement of Additional Information Page 49
<PAGE>
G.T. GLOBAL THEME FUNDS
From time to time, each Fund and G.T. Global may quote information on the top
companies listed on an exchange or index for countries around the world 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>
Further, from time to time, G.T. Global and each Fund will quote information
similar to that described above from sources other than G.T. Capital Management
Inc. such as, but not limited to, S.G. Warburg, Morgan Stanley Capital
International, Wilshire Associates and World Scope. There can be no assurance
that any of the G.T. Global Mutual Funds, will own or continue to own the
securities of the top companies, in any country, listed above.
Statement of Additional Information Page 50
<PAGE>
G.T. GLOBAL THEME FUNDS
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 each 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 51
<PAGE>
G.T. GLOBAL THEME FUNDS
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>
Statement of Additional Information Page 52
<PAGE>
G.T. GLOBAL THEME FUNDS
From time to time, each Fund and G.T. Global may quote the most currently
available data for GDP, GDP Growth, Population, Per Capita GDP, Total Exports,
Total Imports and Inflation Rates and other measurable and quantifiable
expenditures by, 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 each 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 53
<PAGE>
G.T. GLOBAL THEME FUNDS
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>
Further, from time to time, each Fund and G.T. Global may also quote information
similar to that described above from, but not limited to, other sources, such as
S.G. Warburg, Solomon Brothers, Inc. and Datastream.
Statement of Additional Information Page 54
<PAGE>
G.T. GLOBAL THEME FUNDS
GENERAL INFORMATION ABOUT THE THEME FUNDS AND THEME PORTFOLIOS
Each Theme Portfolio may invest worldwide across industries within the
Portfolio's area of concentration without national or regional restrictions. The
ability of each Theme Portfolio to invest worldwide may allow the portfolio
managers to select industries in different economic cycles and varying stages of
development, though there is no assurance that the managers will be successful
in this selection.
Each Theme Portfolio's area of concentration reflects the underlying theme of
the Portfoio. G.T. Global believes that there are certain social, political and
economic trends that may benefit one or more industries within a Theme
Portfolio's area of concentration. Of course, there is no assurance that any of
the Funds will benefit as a result.
HEALTH CARE FUND
From time to time the Fund and G.T. Global will quote information including but
not limited to data regarding:
/ / Trading volume, number of listed companies and the largest companies of
the global health care industry
/ / Expenditures by various countries, regions and age groups on health care
/ / Population of countries, regions and age groups
/ / Natality and mortality rates in various regions, countries and age
groups
/ / Life expectancy rates in various regions, countries and age groups
/ / New health care products and products seeking approval
/ / Health maintenance organizations (HMOs) and its enrollment growth
/ / Studies from, but not limited to, the American Medical Association
showing the effectiveness of using drugs to cure illness
/ / Medical technology and devices in use or in development
The information quoted has not been independently verified by a Fund or G.T.
Global and will be based on data provided that is believed to be reliable and
accurate from but not limited to the following sources:
/ / Research firms such as Mehta and Isaly which publishes PHARMACEUTICAL
PORTFOLIO RECOMMENDATIONS
/ / OECD and its publications such as the OECD HEALTH DATA, as supplemented
annually
/ / Morgan Stanley Capital International stock market industry indices such
as Health & Personal Care
/ / The World Bank and its publications such as THE WORLD DEVELOPMENT
REPORT, as supplemented annually
/ / International Finance Corporation (IFC) and publications such as the
EMERGING STOCK MARKETS FACTBOOK
Statement of Additional Information Page 55
<PAGE>
G.T. GLOBAL THEME FUNDS
INFORMATION ABOUT THE GLOBAL HEALTH CARE INDUSTRY
The Health Care Fund and G.T. Capital believe that certain market and
demographic factors merit an investor's consideration of making a health care
investment. Worldwide standards of living and life expectancy have increased at
a substantial rate during the past twenty years (based on the most recent data
available at December 31, 1992, as compiled by the OECD). G.T. Capital expects
this growth, which works to the general benefit of the global health care
industry, to continue at a roughly comparable rate in the future, although no
assurances can be given in this regard. Moreover, according to G.T. Capital, the
health care industry historically has proven to be a relatively non-cyclical
industry that continues to provide goods and services to the public in periods
of economic weakness as well as economic strength.
G.T. Capital believes that the anticipated increase in the world's elderly
population could increase demand for health care products and services.
According to data compiled by G.T. Capital, in Japan the number of people age 65
and older is expected to grow over 100% by the year 2025; in Germany, France and
the U.S., the same age group should grow 40%. Similarly, the U.S. Census Bureau
predicts the number of Americans 85 and older to double in the next 30 years.
Statement of Additional Information Page 56
<PAGE>
G.T. GLOBAL THEME FUNDS
The following charts, from the Health Data Program of the OECD, provides
information on the populations, birth rates, mortality rates, life expectancy
and health care expenditures for some of the world's countries.
<TABLE>
<CAPTION>
LIFE EXPECTANCY AT SELECTED AGES
------------------------------------------------------------------------
FEMALES
AT FEMALES FEMALES FEMALES MALES AT MALES MALES MALES
BIRTH AT 40 AT 60 AT 80 BIRTH AT 40 AT 60 AT 80
COUNTRY YEARS YEARS YEARS YEARS YEARS YEARS YEARS YEARS
- ---------------------------------------- ------- ------- ------- ------- -------- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
AUSTRALIA............................... 80.0 41.5 23.1 8.6 73.9 36.4 18.8 6.8
AUSTRIA................................. 79.0 40.4 22.3 7.6 72.5 34.9 18.1 6.6
BELGIUM................................. 79.1 40.6 22.5 7.9 72.4 34.8 17.6 6.1
CANADA.................................. 80.4 41.9 23.7 9.3 73.8 36.2 18.9 7.1
DENMARK................................. 77.7 39.2 21.7 8.1 72.0 34.3 17.5 6.4
FINLAND................................. 78.9 40.2 21.9 7.5 70.9 33.5 17.1 6.1
FRANCE.................................. 80.9 n/a n/a n/a 72.7 n/a n/a n/a
GERMANY................................. n/a n/a n/a n/a n/a n/a n/a n/a
GREECE.................................. 78.6 n/a n/a n/a n/a n/a n/a n/a
ICELAND................................. 80.3 41.4 23.3 9.0 75.7 37.7 20.0 7.4
IRELAND................................. n/a n/a n/a n/a n/a n/a n/a n/a
ITALY................................... n/a n/a n/a n/a n/a n/a n/a n/a
JAPAN................................... 81.9 43.0 24.4 8.7 75.9 37.6 20.0 6.9
LUXEMBOURG.............................. 78.5 n/a n/a n/a n/a n/a n/a n/a
NETHERLANDS............................. 80.1 n/a n/a n/a 73.8 n/a n/a n/a
NORWAY.................................. 79.8 n/a n/a 8.1 73.4 n/a n/a 6.4
NEW ZEALAND............................. n/a n/a n/a n/a n/a n/a n/a n/a
PORTUGAL................................ 77.9 n/a n/a n/a 70.9 n/a n/a n/a
SPAIN................................... 80.1 n/a n/a n/a 74.5 n/a n/a n/a
SWEDEN.................................. 80.4 41.6 23.3 8.3 74.8 36.7 19.1 6.6
SWITZERLAND............................. 80.9 42.3 23.9 8.5 74.0 36.6 19.1 6.8
TURKEY.................................. 68.4 35.4 18.1 5.9 64.1 31.5 15.8 5.2
UNITED KINGDOM.......................... 78.5 39.9 21.8 8.2 73.0 34.9 17.5 6.2
UNITED STATES........................... 78.8 n/a n/a n/a 72.0 n/a n/a n/a
<FN>
- ------------------
N.A. indicates that the given country did not report information for the stated
age. 1990 data is the most recent available data.
</TABLE>
<TABLE>
<CAPTION>
TOTAL POPULATION DEMOGRAPHY BY AGE CATEGORY
-----------------------------------------------------
TOTAL POPULATION POPULATION POPULATION
POPULATION 0-64 YEARS 65-79 YEARS 80 YEARS & +
NUMBER POPULATION POPULATION POPULATION
COUNTRY (THOUSANDS) % POP. % POP. % POP.
- ---------------------------------------- ----------- ---------- ----------- ------------
<S> <C> <C> <C> <C>
AUSTRALIA............................... 17,336 88.6 9.1 2.3
AUSTRIA................................. 7,823 84.8 11.6 3.6
BELGIUM................................. 9,840 85.1 11.4 3.5
CANADA.................................. 27,023 88.4 9.2 2.4
DENMARK................................. 5,154 84.4 11.9 3.7
FINLAND................................. 5,008 86.4 10.6 3.0
FRANCE.................................. 57,050 85.9 10.3 3.8
GERMANY................................. 64,036 84.6 11.6 3.8
GREECE.................................. 10,264 86.1 10.8 3.1
ICELAND................................. 260 89.2 8.3 2.5
IRELAND................................. 3,520 88.8 9.1 2.1
ITALY................................... 57,783 84.6 12.3 3.1
JAPAN................................... 123,920 87.4 10.1 2.5
LUXEMBOURG.............................. 378 86.4 10.6 3.0
NETHERLANDS............................. 15,065 87.1 9.9 3.0
NORWAY.................................. 4,262 83.6 12.6 3.8
NEW ZEALAND............................. 3,396 88.9 8.8 2.3
PORTUGAL................................ 9,852 86.9 10.6 2.5
SPAIN................................... 39,025 86.3 10.8 2.9
SWEDEN.................................. 8,617 82.3 13.3 4.4
SWITZERLAND............................. 6,860 85.0 11.0 4.0
TURKEY.................................. 57,700 95.8 n/a n/a
UNITED KINGDOM.......................... 57,370 84.2 12.1 3.7
UNITED STATES........................... 262,200 87.3 9.8 2.9
<FN>
- ------------------
N.A. indicates that the given country did not report information for the stated
age. 1991 data is the most recent available data.
</TABLE>
Statement of Additional Information Page 57
<PAGE>
G.T. GLOBAL THEME FUNDS
<TABLE>
<CAPTION>
BIRTH AND DEATH RATES PER
1,000 PEOPLE
--------------------------
NATALITY MORTALITY
COUNTRY RATE RATE
- --------------------------------------------------------------------------------- ----------- -------------
<S> <C> <C>
AUSTRALIA........................................................................ 14.9 6.9
AUSTRIA.......................................................................... 12.0 10.6
BELGIUM.......................................................................... 12.6 10.4
CANADA........................................................................... 15.0 7.1
DENMARK.......................................................................... 12.6 11.6
FINLAND.......................................................................... 13.1 9.8
FRANCE........................................................................... 13.3 9.2
GERMANY.......................................................................... 11.3 11.1
GREECE........................................................................... 9.8 9.1
ICELAND.......................................................................... 17.6 7.0
IRELAND.......................................................................... 15.0 8.9
ITALY............................................................................ 12.7 9.5
JAPAN............................................................................ 9.9 6.7
LUXEMBOURG....................................................................... 12.9 9.7
NETHERLANDS...................................................................... 13.2 8.6
NORWAY........................................................................... 14.3 10.5
NEW ZEALAND...................................................................... 17.5 7.8
PORTUGAL......................................................................... 11.8 10.0
SPAIN............................................................................ 9.9 8.7
SWEDEN........................................................................... 14.4 11.0
SWITZERLAND...................................................................... 12.6 9.2
TURKEY........................................................................... 29.0 n/a
UNITED KINGDOM................................................................... 13.8 11.2
UNITED STATES.................................................................... 16.5 8.5
<FN>
- ------------------
N.A. indicates that the given country did not report information for the stated
age. 1991 data is the most recent available data.
</TABLE>
<TABLE>
<CAPTION>
TOTAL HEALTH CARE EXPENDITURES AS A
PERCENTAGE OF GDP
---------------------------------------
TOTAL TOTAL
EXPENDITURES IN EXPENDITURES AS A
COUNTRY $U.S. MILLIONS PERCENTAGE OF GDP
- ---------------------------------------------------------------- --------------- ----------------------
<S> <C> <C>
AUSTRALIA....................................................... 25,920.3 8.6
AUSTRIA......................................................... 13,767.1 8.4
BELGIUM......................................................... 15,505.0 7.9
CANADA.......................................................... 58,061.7 10.0
DENMARK......................................................... 8,501.7 6.5
FINLAND......................................................... 11,101.5 8.9
FRANCE.......................................................... 108,634.8 9.1
GERMANY......................................................... 133,734.9 8.5
GREECE.......................................................... 3,669.1 5.2
ICELAND......................................................... 543.7 8.4
IRELAND......................................................... 3,193.5 7.3
ITALY........................................................... 95,848.5 8.3
JAPAN........................................................... 223,048.3 6.6
LUXEMBOURG...................................................... 652.8 7.2
NETHERLANDS..................................................... 23,879.7 8.3
NORWAY.......................................................... 8,179.0 7.6
NEW ZEALAND..................................................... 3,256.1 7.6
PORTUGAL........................................................ 4,683.1 6.8
SPAIN........................................................... 35,119.8 6.7
SWEDEN.......................................................... 20,429.8 8.6
SWITZERLAND..................................................... 18,321.7 7.9
TURKEY.......................................................... 4,398.3 4.0
UNITED KINGDOM.................................................. 66,666.7 6.6
UNITED STATES................................................... 751,771.0 13.4
<FN>
- ------------------
N.A. indicates that the given country did not report information for the stated
age. 1991 data is the most recent available data.
</TABLE>
Statement of Additional Information Page 58
<PAGE>
G.T. GLOBAL THEME FUNDS
<TABLE>
<CAPTION>
TOTAL HEALTH CARE
EXPENDITURES PER
CAPITA
--------------------
COUNTRY 1981 1991
- ------------------------------------------------------------------------------------ --------- ---------
<S> <C> <C>
AUSTRALIA........................................................................... 909 1,495
AUSTRIA............................................................................. 721 1,760
BELGIUM............................................................................. 701 1,576
CANADA.............................................................................. 911 2,149
DENMARK............................................................................. 763 1,650
FINLAND............................................................................. 697 2,217
FRANCE.............................................................................. 846 1,904
GERMANY............................................................................. 958 2,088
GREECE.............................................................................. 171 357
ICELAND............................................................................. 970 2,091
IRELAND............................................................................. 468 907
ITALY............................................................................... 484 1,659
JAPAN............................................................................... 660 1,800
LUXEMBOURG.......................................................................... 740 1,727
NETHERLANDS......................................................................... 814 1,585
NORWAY.............................................................................. 916 1,919
NEW ZEALAND......................................................................... 530 959
PORTUGAL............................................................................ 156 475
SPAIN............................................................................... 284 900
SWEDEN.............................................................................. 1,313 2,371
SWITZERLAND......................................................................... 1,083 2,671
TURKEY.............................................................................. 56 76
UNITED KINGDOM...................................................................... 546 1,162
UNITED STATES....................................................................... 1,222 2,867
<FN>
- ------------------
1991 data is the most recent available data.
</TABLE>
Statement of Additional Information Page 59
<PAGE>
G.T. GLOBAL THEME FUNDS
The following table compares GDP against the life expectancies in developed and
emerging markets. G.T. Global believes that the higher a country's GDP, the
higher the life expectancy of its population. Further, we believe developing
countries, particularly those in the Pacific Rim and Eastern Europe, represent
new markets for health care companies, as people in these regions gain the
resources for basic health care and begin to live longer.
GROSS DOMESTIC PRODUCT VS. LIFE EXPECTANCY
<TABLE>
<CAPTION>
GDP/CAPITA (US$) LIFE EXPECTANCY
---------------- ---------------
<S> <C> <C>
Japan....................................................... $29,485.78 79
U.S......................................................... $23,180.11 77
Germany..................................................... $22,199.27 76
Canada...................................................... $18,014.67 78
Australia................................................... $16,843.43 77
Singapore................................................... $16,437.50 75
UK.......................................................... $15,625.02 76
Spain....................................................... $14,701.89 77
Hong Kong................................................... $13,418.62 78
New Zealand................................................. $12,148.24 76
Portugal.................................................... $ 8,117.04 74
Argentina................................................... $ 6,911.75 71
South Korea................................................. $ 6,776.57 71
Greece...................................................... $ 6,531.84 77
Mexico...................................................... $ 3,870.72 70
Malaysia.................................................... $ 3,095.05 71
Chile....................................................... $ 3,029.63 72
Brazil...................................................... $ 2,341.81 66
Thailand.................................................... $ 1,902.36 69
Philippines................................................. $ 815.89 65
Indonesia................................................... $ 685.64 60
Pakistan.................................................... $ 351.25 59
Nigeria..................................................... $ 291.14 52
<FN>
- --------------
Source: World Development Report 1994, The World Bank, June 1994.
</TABLE>
Statement of Additional Information Page 60
<PAGE>
G.T. GLOBAL THEME FUNDS
The following table shows the growth in health care expenditures in the United
States for the 20-year period ended December 31, 1993.
<TABLE>
<CAPTION>
U.S. GDP
US HEALTH CARE EXPENDITURES (US$ HEALTH CARE EXPENDITURES AS A
YEAR U.S. CFI % CHANGE (US$ BILLIONS) BILLIONS) % OF GDP
----- ------------------- ----------------------------- ------------- -----------------------------
<S> <C> <C> <C> <C>
74 11.01 80.1 1,457.9 5%
75 9.18 93 1,584.8 6%
76 5.75 106.2 1,767 6%
77 6.48 122.4 1,974.1 6%
78 7.63 139.7 2,232.7 6%
79 11.24 157.8 2,488.6 6%
80 13.54 181.2 2,708 7%
81 10.36 213.6 3,030.6 7%
82 6.19 240.5 3,149.6 8%
83 3.22 265.7 3,405 8%
84 4.26 290.6 3,777.2 8%
85 3.55 319.3 4,038.7 8%
86 1.9 346.4 4,268.6 8%
87 3.66 384.7 4,539.9 8%
88 4.08 427.7 4,900.4 9%
89 4.83 471.9 8,250.8 9%
90 5.39 526.2 5,546.1 9%
91 4.25 577 5,722.9 10%
92 3.03 628.4 6,038.5 10%
93 2.96 680.6 6,374 11%
</TABLE>
From 1974 to 1993, health care expenditures as a share of GDP has doubled in the
U.S.
- --------------
Source: Datastream, February 4, 1994. Latest available data is September, 1993.
TELECOMMUNICATIONS FUND
From time to time the Fund and G.T. Global will quote information including data
regarding:
/ / Increased usage of new technologies such as, but not limited to,
cellular and wireless communications in emerging and established
countries around the world
The information quoted has not been independently verified by the Fund or G.T.
Global and will be based on data provided that is believed to be reliable and
accurate from but not limited to the following sources:
/ / Salomon Brothers World Equity Telecommunications Index, which includes
stock market data about the telecommunications industry in established
and developing markets
/ / OECD and other publications from its subsidiaries such as the
International Telecommunications Union
/ / Morgan Stanley Capital International stock market industry indices such
as Telecommunications, Broadcasting & Publishing and Data Processing &
Reproduction
/ / International Technology Consultants (ITC), a Washington D.C. based firm
which publishes reports such as EASTERN EUROPEAN & SOVIET TELECOM REPORT
and LATIN AMERICAN TELECOM REPORT
Statement of Additional Information Page 61
<PAGE>
G.T. GLOBAL THEME FUNDS
INFORMATION ABOUT THE GLOBAL TELECOMMUNICATIONS INDUSTRY
The Telecommunications Fund and G.T. Capital believe that certain political and
market factors merit an investor's consideration of a telecommunications
investment. In analyzing the telecommunications industry, G.T. Capital has
identified four areas that it expects will create investment opportunities. G.T.
Capital believes that deregulation of companies in the industry, which will
allow competition to promote greater efficiencies, privatization of state-owned
telecommunications businesses, development of infrastructure in underdeveloped
countries and upgrading of services in other countries, and emergence of
technologies that will enhance productivity and reduce costs in the
telecommunications industry, each will lead to growth in the sector. Of course,
there is no certainty that these factors will produce the anticipated results.
The following chart provides information on the key emerging trends as
identified by G.T. Capital, occurring in the telecommunications industry in some
of the world's countries.
<TABLE>
<S> <C> <C> <C> <C>
Infrastructure Privatization Deregulation New Technologies
------------- ------------ ------------ ----------------------------------
Argentina X X X
Brazil X X X
Canada X X
China X X X
France X
Germany X X X
Hong Kong X X X
Italy X X
Japan X X
Malaysia X X X
Mexico X X X
New Zealand X
Philippines X X X
Spain X X
Sweden X X
United Kingdom X X X
United States X X
</TABLE>
SOURCE: G.T. CAPITAL MANAGEMENT, INC., DECEMBER 31, 1994.
Statement of Additional Information Page 62
<PAGE>
G.T. GLOBAL THEME FUNDS
Moreover, according to G.T. Capital, the telecommunications industry
historically has proven to be a relatively non-cyclical industry that provides
goods and services to the public in periods of economic weakness as well as
economic strength. G.T. believes that the emerging economies around the world
lack access to basic telephone service. The following table illustrates the need
for basic telephone service outside the U.S based on telephone lines per 100
persons. G.T. Global believes that as a country's wealth, or GDP per capita
increases, more of a country's population demands access to basic telephone
service.
<TABLE>
<CAPTION>
TELEPHONE LINES/1,000 PERSONS
-----------------------------
<S> <C>
U.S......................................................... 545
Switzerland................................................. 587
Sweden...................................................... 683
Denmark..................................................... 566
Norway...................................................... 503
France...................................................... 495
Germany..................................................... 483
Finland..................................................... 535
Netherlands................................................. 464
Italy....................................................... 388
U.K......................................................... 442
Spain....................................................... 323
Portugal.................................................... 241
Greece...................................................... 391
Hungary..................................................... 96
Turkey...................................................... 123
Poland...................................................... 86
Japan....................................................... 441
Australia................................................... 456
Singapore................................................... 385
Hong Kong................................................... 434
New Zealand................................................. 437
South Korea................................................. 310
Malaysia.................................................... 89
Thailand.................................................... 24
Philippines................................................. 10
Indonesia................................................... 6
Argentina................................................... 96
Mexico...................................................... 66
Chile....................................................... 65
Brazil...................................................... 63
<FN>
- --------------
Source: The World Development Report 1994, The World Bank, June 1994.
</TABLE>
Statement of Additional Information Page 63
<PAGE>
G.T. GLOBAL THEME FUNDS
DEREGULATION IN THE UNITED STATES
The United States has been the bellwether for deregulation of the telephone
industry. The divestiture of the Bell System from American Telephone and
Telegraph has produced new competing companies in the United States. Such U.S.
market-driven competition has, for example, led to lower costs for consumers
which in turn led to greater consumer usage and to higher industrywide revenues.
G.T. Capital expects this scenario to continue to benefit such companies in the
U.S. and to similarly to be realized by the established telecommunications
companies in established economies, although no assurances can be made in this
regard. The above information on the deregulation of long distance and
international telephone service carriers in the United States is based on a
study from a source that indicated the study would not be updated in the near
future. It is believed by G.T. Global, however, that although the study has not
been updated, G.T. Global believes the trend continues to be accurate.
<TABLE>
<S> <C> <C> <C> <C>
Growing Demand for Higher Industry
Telecommunications Revenue
Services
Deregulation Increased Lower Prices Greater Usage
Competition for Consumers
Extensive Regulation
and Lack of
Competition
</TABLE>
SOURCE: G.T. CAPITAL MANAGEMENT, INC.
Statement of Additional Information Page 64
<PAGE>
G.T. GLOBAL THEME FUNDS
INTERNATIONAL TELEPHONE SERVICE --
FALLING PRICES AND RISING USAGE LEADS TO HIGHER REVENUE
<TABLE>
<CAPTION>
REVENUE ($ PRICE
MILLIONS) PER MINUTE
----------- -----------
<S> <C> <C>
1975................................................................................. $ 576 $2.25
1976................................................................................. $ 679 $2.22
1977................................................................................. $ 807 $2.20
1978................................................................................. $ 977 $2.12
1979................................................................................. $ 1,122 $1.78
1980................................................................................. $ 2,097 $1.34
1981................................................................................. $ 2,239 $1.21
1982................................................................................. $ 2,382 $1.09
1983................................................................................. $ 2,876 $1.09
1984................................................................................. $ 3,197 $1.05
1985................................................................................. $ 3,487 $1.03
1986................................................................................. $ 4,004 $0.99
1987................................................................................. $ 4,750 $1.02
1988................................................................................. $ 5,800 $1.06
1989................................................................................. $ 6,901 $1.07
1990................................................................................. $ 8,042 $1.06
1991................................................................................. $ 9,096 $1.01
1992................................................................................. $ 10,179 $1.00
</TABLE>
WHILE THE PRICE PER MINUTE OF INTERNATIONAL TELEPHONE SERVICE HAS FALLEN, USAGE
HAS INCREASED, DRIVING TOTAL REVENUE FOR INTERNATIONAL TELEPHONE SERVICE UPWARD.
- --------------
Source: 1975 to 1979, Trends in the International Communications Industry,
1975-1990, Federal Communications Commission (FCC), October 4, 1991; 1980 to
1992, Trends in the International Communications Industry, Federal
Communications Commission (FCC), March 1994. From 1975 to 1979, the FCC report
classified calls between the continental U.S. and Hawaii and Puerto Rico as
overseas calls. This information is reflected in the data for that time period.
Statement of Additional Information Page 65
<PAGE>
G.T. GLOBAL THEME FUNDS
CELLULAR PHONE OWNERSHIP
<TABLE>
<CAPTION>
% OF POPULATION
OWNING A CELLULAR
PHONE
-----------------
<S> <C>
Hungary.................... 0.4%
Mexico..................... 0.4%
Chile...................... 0.6%
Venezuela.................. 0.8%
Japan...................... 1.6%
Germany.................... 2.2%
Taiwan..................... 2.6%
United Kingdom............. 3.8%
Hong Kong.................. 4.8%
Singapore.................. 5.8%
United States.............. 6.2%
Sweden..................... 9.0%
Finland.................... 9.3%
</TABLE>
From time to time G.T. Global and the Funds may discuss cellular data, such as,
but not limited to, the above for, but not limited to, these countries.
Source: TeleGeography 1994, TeleGeography, Inc., Washington, D.C., October 1994.
The following chart lists the top five financial services companies worldwide in
their respective industry.
<TABLE>
<S> <C>
COMMERCIAL BANKS
Fuji Bank................................................................................. Japan
Dai-Ichi Kangyo Bank...................................................................... Japan
Sumitomo Bank............................................................................. Japan
Sanwa Bank................................................................................ Japan
Sakura Bank............................................................................... Japan
DIVERSIFIED FINANCIAL SERVICE COMPANIES
Federal National Mortgage Association..................................................... U.S.
Salomon Brothers.......................................................................... U.S.
Ing Group................................................................................. Netherlands
Merrill Lynch............................................................................. U.S.
Axa....................................................................................... France
SAVINGS INSTITUTIONS
Abbey National............................................................................ UK
Halifax Building Society.................................................................. UK
La Caixa.................................................................................. Spain
Nationwide Anglia Building Society........................................................ UK
H.F. Ahmanson............................................................................. U.S.
LIFE INSURANCE COMPANIES
Nippon Life............................................................................... Japan
Dai-Ichi Mutual Life...................................................................... Japan
Sumitomo Life............................................................................. Japan
Prudential of America..................................................................... U.S.
Meiji Mutual Life......................................................................... Japan
</TABLE>
SOURCE: FORTUNE, "Fortune Guide To The Global Services 500," AUGUST 22, 1994.
- -C- 1994 TIME INC. ALL RIGHTS RESERVED. RANKING IS BY ASSET SIZE FOR 1993.
RANKINGS ARE SUBJECT TO CHANGE. REPRINTED WITH PERMISSION FROM FORTUNE. THERE
CAN BE NO ASSURANCE THE GLOBAL FINANCIAL SERVICES PORTFOLIO WILL HOLD THE
SECURITIES OF THESE COMPANIES.
Statement of Additional Information Page 66
<PAGE>
G.T. GLOBAL THEME FUNDS
INFRASTRUCTURE FUND
The following table describes that in some Asian countries the demand for energy
is growing faster than the economy.
<TABLE>
<CAPTION>
ELECTRICITY
GDP GROWTH CONSUMPTION GROWTH
RATE (%) RATE (%)
----------------- -------------------
<S> <C> <C>
China.................. 9.3 8.7
Korea.................. 8.9 11.7
Thailand............... 8.4 12.3
Taiwan................. 8.1 8.5
Singapore.............. 6.5 8.4
Hong Kong.............. 6.5 8.9
Malaysia............... 6.2 12.3
Indonesia.............. 5.8 15.7
Pakistan............... 5.4 10.2
India.................. 5.2 11.0
Sri Lanka.............. 4.0 7.4
Philippines............ 0.6 4.6
</TABLE>
Source: Jardine Fleming, Asian Power Review, April 1994. Data from 1983-1992.
The following chart shows that some emerging market countries have doubled the
number of kilometers of paved roads in twenty years.
ROAD CONSTRUCTION DOUBLES IN TWENTY YEARS
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
PERCENT INCREASE OF PAVED ROADS (KM) FROM 1970 TO 1990
<S> <C>
South Korea 847%
Indonesia 453%
Thailand 313%
Pakistan 250%
Brazil 219%
Turkey 140%
India 134%
Singapore 128%
</TABLE>
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.
Statement of Additional Information Page 67
<PAGE>
G.T. GLOBAL THEME FUNDS
G.T. GLOBAL CONSUMER PRODUCTS AND SERVICES FUND
From time to time the Fund and G.T. Global will quote information including, but
not limited to, data regarding:
/ / Trading volume, number of listed companies and the largest companies
located around the world in the consumer products and services
industries
/ / Expenditures, demand and consumption by various countries, regions,
income classes and age groups of consumer products and services
/ / Population of countries, regions and age groups
/ / Life expectancy rates in various regions, countries and age groups
/ / New consumer products and services in the development or manufacturing
stages
/ / Income of various regions, countries and age groups
/ / Sales and sales growth of consumer products and services companies in
their own country and abroad
/ / Sales, supply and demand of consumer products and services
/ / Parent Companies and the products and services they distribute
The information quoted will not be independently verified by the Fund or G.T.
Global and will be based on data provided that is believed to be reliable and
accurate from, but not limited to, the following sources:
/ / Consumer and trade groups
/ / Fortune magazine and other periodicals
/ / The World Bank and its publications
/ / The International Monetary Fund (IMF) and its publications
/ / The International Finance Corporation (IFC) and its publications
/ / The Organization for Economic Cooperation and Development (OECD) and its
publications
The following chart for the seven year period ended December 31, 1993
illustrates changes in per capita gross domestic product of developing and
developed countries.
RISING INCOME IN DEVELOPING ECONOMIES
PER CAPITA GDP (ANNUAL % CHANGE)
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
DEVELOPING COUNTRIES ESTABLISHED COUNTRIES
<S> <C> <C>
1986 2.5 2.2
1987 3.4 2.6
1988 4.7 3.8
1989 0.7 2.6
1990 1.9 1.6
1991 2.5 0.2
1992 3.3 0.8
1993 4.1 0.6
</TABLE>
IN DEVELOPING COUNTRIES, WE BELIEVE THAT RISING INCOMES ARE CREATING NOT ONLY A
NEW CLASS OF CONSUMERS BUT MORE MONEY TO SPEND ON PRODUCTS AND SERVICES.
SOURCES: WORLD ECONOMIC OUTLOOK OCTOBER 1994. INTERNATIONAL MONETARY FUND 1994.
Statement of Additional Information Page 68
<PAGE>
G.T. GLOBAL THEME FUNDS
IMPORTANT POINTS TO NOTE ABOUT THE ABOVE DATA RELATING TO WORLD EQUITY AND BOND
MARKET PERFORMANCE AND EQUITY MARKET DIVERSIFICATION
The information contained above relating to foreign market performance and
diversification 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 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
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. 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. Moreover, the Fund may invest a portion
of its assets in corporate bonds, while the above data relates only to
government bonds. Each of these factors will cause the performance of the Fund
to differ from the indices shown above.
Statement of Additional Information Page 69
<PAGE>
G.T. GLOBAL THEME FUNDS
DESCRIPTION OF DEBT RATINGS
- --------------------------------------------------------------------------------
DESCRIPTION OF COMMERCIAL PAPER RATINGS
MOODY'S INVESTORS SERVICE, INC. ("MOODY'S") employs the designations "Prime-1"
and "Prime-2" to indicate commercial paper having the highest capacity for
timely repayment. Issuers rated Prime-1 (or supporting institutions)have a
superior ability for repayment of short-term debt 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 protection; broad margins in earnings coverage of fixed
financial charges and high internal cash generation; and well-established access
to a range of financial markets and assured sources of alternate liquidity.
Issuers rated Prime-2 (or supporting institutions) have a strong ability for
repayment of short-term debt obligations. This normally will be evidenced by
many of the characteristics cited above, but to a lesser degree. Earnings trends
and coverage ratios, while sound, will be more subject to variation.
Capitalization characteristics, while still appropriate, may be more affected by
external conditions. Ample alternate liquidity is maintained.
STANDARD & POOR'S RATINGS GROUP'S ("S&P") rates commercial paper in four
categories ranging from "A-1" for the highest quality obligations to "D" for the
lowest. A-1 -- This highest category indicates that the degree of safety
regarding timely payment is strong. Those issues determined to possess extremely
strong safety characteristics will be denoted with a plus sign (+) designation.
A-2 -- Capacity for timely payment on issues with this designation is
satisfactory. If, however, the relative degree of safety is not as high as for
issues designated "A-1." A-3 -- Issues carrying this designation have adequate
capacity for timely payment. They are, however, more vulnerable to the adverse
effects of changes in circumstances than obligations carrying the higher
designations. B -- Issues rated "B" are regarded as having only speculative
capacity for timely payment. C -- This rating is assigned to short-term debt
obligations with a doubtful capacity for payment. D -- Debt rated "D" is in
payment default. The "D" 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.
DESCRIPTION OF BOND RATINGS
MOODY'S rates the long-term debt securities issued by various entities from
"Aaa" to "C." Investment Grade Ratings are the first four categories:
Aaa -- Best quality. These securities carry the smallest degree of
investment risk and are generally referred to as "gilt edged." Interest
payments are protected by a large, or by an exceptionally stable, margin and
principal is secure. While the various protective elements are likely to
change, such changes as can be visualized are most unlikely to impair the
fundamentally strong position of such issues.
Aa -- High quality by all standards. Together with the Aaa group, they
comprise what are generally known as high grade bonds. They are rated lower
than the best bonds because margins of protection may not be as large as in
Aaa securities or fluctuation of protective elements may be of greater
amplitude or other elements may be 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 -- Have speculative elements and their future cannot be considered to
be well-assured. Often the protection of interest and principal payments may
be very moderate and thereby not well safeguarded during both good and bad
times over the future. Uncertainty of position characterizes bonds in this
class.
Statement of Additional Information Page 70
<PAGE>
G.T. GLOBAL THEME FUNDS
B -- Generally lack characteristics of the desirable investment.
Assurance of interest and principal payments or of maintenance of other
terms of the contract over any long period of time may be small.
Caa -- Poor standing. Such issues may be in default or there may be
present elements of danger with respect to principal or interest.
Ca -- Speculative in a high degree. Such issues are often in default or
have other marked shortcomings.
C -- Lowest rated class of bonds. Issues so rated can be regarded as
having extremely poor prospects of ever attaining any real investment
standing.
ABSENCE OF RATING: Where no rating has been assigned or where a rating has been
suspended or withdrawn, it may be for reasons unrelated to the quality of the
issue.
Should no rating be assigned, the reason may be one of the following:
1. An application for rating was not received or accepted.
2. The issue or issuer belongs to a group of securities or companies
that are not rated as a matter of policy.
3. There is a lack of essential data pertaining to the issue or issuer.
4. The issue was privately placed, in which case the rating is not
published in Moody's publications.
Suspension or withdrawal may occur if new and material circumstances arise, the
effects of which preclude satisfactory analysis; if there is no longer available
reasonable up-to-date data to permit a judgement to be formed; if a bond is
called for redemption; or for other reasons.
Note: Moody's applies numerical modifiers 1, 2 and 3 in each generic rating
classification from Aa to B in its corporate bond rating system. The modifier 1
indicates that the security ranks in the higher end of its generic rating
category; the modifier 2 indicates a mid-range ranking; and the modifier 3
indicates that the issue ranks in the lower end of its generic rating category.
S&P rates the securities debt of various entities in categories ranging from
"AAA" to "D" according to quality. Investment grade ratings are the first four
categories:
AAA -- Highest rating. Capacity to pay interest and repay principal is
extremely strong.
AA -- Very strong capacity to pay interest and repay principal and
differs from the higher rated issues only in a small degree.
A -- Has a strong capacity to pay interest and repay principal although
it is somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than debt in higher rated categories.
BBB -- Regarded as having adequate capacity to pay interest and repay
principal. Whereas it normally exhibits adequate protection parameters,
adverse economic conditions or changing circumstances are more likely to
lead to a weakened capacity to pay interest and repay principal for debt in
this category than in higher rated categories.
BB, B, CCC, CC, C -- Debt rated "BB," "B," "CCC," "CC," and "C" is
regarded, on balance, as predominantly speculative with respect to capacity
to pay interest and repay principal in accordance with the terms of the
obligation. "BB" 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.
BB -- Has less near-term vulnerability to default than other speculative
issues. However, it faces 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. The "BB" rating
category is also used for debt subordinated to senior debt that is assigned
an actual or implied "BBB-" rating.
B -- Has a greater vulnerability to default but currently has 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. The "B" rating category is
also used for debt subordinated to senior debt that is assigned an actual or
implied "BB" or "BB-" rating.
CCC -- Has a currently identifiable vulnerability to default and is
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, it is not likely to
have the capacity to pay interest and repay principal. The
Statement of Additional Information Page 71
<PAGE>
G.T. GLOBAL THEME FUNDS
"CCC" rating category is also used for debt subordinated to senior debt that
is assigned an actual or implied "B" or "B-" rating.
CC -- Typically applied to debt subordinated to senior debt that is
assigned an actual or implied "CCC" rating.
C -- Typically applied to debt subordinated to senior debt that is
assigned an actual or implied "CCC-" debt rating. The "C" rating may be used
to cover a situation where a bankruptcy petition has been filed, but debt
service payments are continued.
C1 -- Reserved for income bonds on which no interest is being paid.
D -- In payment default. The "D" 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 will also be used up on the
filing of a bankruptcy petition if debt service payments are jeopardized.
PLUS (+) OR MINUS (-): The ratings from "AA" to "CCC" may be modified by the
addition of a plus or minus sign to show relative standing within the major
rating categories.
NR: Indicates that no public rating has been requested, that there is
insufficient information on which to base a rating, or that S&P does not rate a
particular type of obligation as a matter of policy.
- --------------------------------------------------------------------------------
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
The audited financial statements of Health Care Fund, Telecommunications Fund,
Financial Services Fund, Infrastructure Fund and Natural Resources Fund at
October 31, 1994, and for the year then ended, the audited financial statement
of Consumer Products and Services Fund at December 20, 1994, and the unaudited
financial statements of Consumer Products and Services Fund at April 30, 1995
appear on the following pages.
Statement of Additional Information Page 72
<PAGE>
G.T. GLOBAL FINANCIAL SERVICES 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 Financial Services Fund, one of the funds organized as a series of G.T.
Investment Funds, Inc., as of October 31, 1994 and the related statement of
operations, the statement of changes in net assets and the financial highlights
for the period from May 31, 1994 (commencement of operations) to October 31,
1994. 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
audit.
We conducted our audit 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. 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
audit provides 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 Financial Services Fund as of October 31, 1994, and the results of
its operations, the changes in its net assets and the financial highlights for
the period from May 31, 1994 (commencement of operations) to October 31, 1994,
in conformity with generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
BOSTON, MASSACHUSETTS
DECEMBER 16, 1994
Statement of Additional Information Page 73
<PAGE>
G.T. GLOBAL FINANCIAL SERVICES FUND
STATEMENT OF ASSETS
AND LIABILITIES
October 31, 1994
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Assets:
<S> <C>
Investments in Global Financial Services Portfolio (cost $5,148,440) (Note 1)..........................
$5,175,735
Receivable for expense reimbursement (Note 2)..........................................................
96,844
Receivable for Fund shares sold........................................................................
143,492
Unamortized deferred organizational expenses (Note 1)..................................................
57,842
----------
Total assets...........................................................................................
5,473,913
----------
Liabilities:
Payable for Fund shares repurchased....................................................................
19,103
Payable for registration fees..........................................................................
13,285
Payable for professional fees..........................................................................
10,766
Payable for printing and postage expenses..............................................................
10,392
Payable for service and distribution expenses (Note 2).................................................
2,993
Payable for transfer agent fees (Note 2)...............................................................
2,044
Payable for custodian fees.............................................................................
1,800
Payable for Administration fees (Note 2)...............................................................
1,087
Payable for Directors' fees (Note 2)...................................................................
1,014
Accrued expenses.......................................................................................
1,427
----------
Total liabilities......................................................................................
63,911
----------
Net assets...............................................................................................
$5,410,002
----------
----------
Class A:
Net asset value and redemption price per share
($3,175,149 DIVIDED BY 273,195 shares outstanding)......................................................
$ 11.62
----------
----------
Maximum offering price per share
(100/95.25 of $11.62)*..................................................................................
$ 12.20
----------
----------
Class B:+
Net asset value and offering price per share
($2,234,853 DIVIDED BY 192,711 shares outstanding)......................................................
$ 11.60
----------
----------
Net assets consist of:
Paid in capital (Note 4)...............................................................................
$5,404,049
Undistributed net investment income....................................................................
5,694
Accumulated net realized loss on investments and foreign currency conversions --
Global Financial Services Portfolio...................................................................
(32,440)
Net unrealized appreciation of investments -- Global Financial Services Portfolio......................
32,699
----------
Total -- representing net assets applicable to capital shares outstanding..............................
$5,410,002
----------
----------
<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 74
<PAGE>
G.T. GLOBAL FINANCIAL SERVICES FUND
STATEMENT OF OPERATIONS
May 31, 1994 (commencement of operations) to October 31, 1994
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Investment income (Note 1):
Dividend income -- Global Financial Services Portfolio................................................... $ 23,933
Interest income -- Global Financial Services Portfolio................................................... 13,042
---------
Total investment income.................................................................................. 36,975
---------
Expenses:
Expenses -- Global Financial Services Portfolio.......................................................... 50,670
Professional fees........................................................................................ 20,890
Transfer agent fees (Note 2)............................................................................. 15,637
Printing and postage expenses............................................................................ 10,623
Service and distribution expenses (Note 2):
Class A..................................................................................... $ 3,860
Class B..................................................................................... 4,398 8,258
---------
Registration fees........................................................................................ 5,300
Amortization of organizational expenses (Note 1)......................................................... 5,258
Directors' fees (Note 2)................................................................................. 5,090
Administration fees (Note 2)............................................................................. 3,029
Custodian fees........................................................................................... 1,840
Other.................................................................................................... 1,530
---------
Total expenses before expense reimbursement.............................................................. 128,125
Less expense reimbursement (Note 2)...................................................................... (96,844)
---------
Total expenses........................................................................................... 31,281
---------
Net investment income...................................................................................... 5,694
---------
Net realized and unrealized gain (loss) on investments and foreign currencies (Note 1):
Net realized loss on investments -- Global Financial Services Portfolio....................... (25,821)
Net realized loss on foreign currency conversions -- Global Financial Services Portfolio...... (6,619)
---------
Net realized loss........................................................................................ (32,440)
Increase in unrealized appreciation of investments -- Global Financial Services Portfolio................ 32,699
---------
Net realized and unrealized gain on investments and foreign currency conversions -- Global Financial
Services Portfolio........................................................................................ 259
---------
Net increase in net assets resulting from operations....................................................... $ 5,953
---------
---------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 75
<PAGE>
G.T. GLOBAL FINANCIAL SERVICES FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MAY 31, 1994
(COMMENCEMENT OF OPERATIONS)
TO OCTOBER 31, 1994
-----------------------------
<S> <C>
Increase in net assets
Operations:
Net investment income..............................................................................
$ 5,694
Net realized loss on investments and foreign currency conversions..................................
(32,440)
Increase in unrealized appreciation of investments.................................................
32,699
-----------
Net increase in net assets resulting from operations...............................................
5,953
Capital Share Transactions (Note 3):
Increase from shares sold..........................................................................
5,652,003
Decrease from shares repurchased...................................................................
(347,954)
-----------
Net increase from capital shares transactions......................................................
5,304,049
-----------
Total increase in net assets.........................................................................
5,310,002
Net assets:
Beginning of period................................................................................
100,000
-----------
End of period......................................................................................
$ 5,410,002*
-----------
-----------
<FN>
- ----------------
* Includes undistributed net investment income of $5,694.
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 76
<PAGE>
G.T. GLOBAL FINANCIAL SERVICES FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout the period, total investment return, ratios and supplemental data
throughout the period. This information has been derived from information
provided in the financial statements.
<TABLE>
<CAPTION>
CLASS A CLASS B
MAY 31, 1994 MAY 31, 1994
(COMMENCEMENT OF OPERATIONS) (COMMENCEMENT OF OPERATIONS)
TO TO
OCTOBER 31, 1994 OCTOBER 31, 1994
----------------------------- -----------------------------
<S> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period................................. $ 11.43 $ 11.43
------- -------
Income from investment operations:
Net investment income.............................................. 0.02* 0.00*
Net realized and unrealized gain on investments and foreign
currency conversions.............................................. 0.17** 0.17**
------- -------
Net increase resulting from investment operations.................. 0.19 0.17
------- -------
Net asset value, end of period....................................... $ 11.62 $ 11.60
------- -------
------- -------
Total investment return (c).......................................... 1.66%(b) 1.49%(b)
Ratios and supplemental data:
Net assets, end of period (in 000's)............................... $ 3,175 $ 2,235
Ratio of net investment income to average net assets............... 0.66%(a)* 0.16%(a)*
Ratio of net expenses to average net assets........................ 2.40%(a)* 2.90%(a)*
<FN>
- ----------------
(a) Annualized.
(b) Not annualized.
(c) Total investment return does not include sales charges.
* The annualized ratios of operating expenses and net investment income to
average net assets for Class A and Class B before reimbursement by G.T.
Capital Management, Inc. for the period ended October 31, 1994 would have
been 10.32% and (7.26)%; and 10.82% and (7.76)%, respectively. The net
investment income per share would have been reduced by $0.23 for each
class.
** The per share amount does not correspond with the net realized and
unrealized gain for the period due to the timing of the sales of Fund
shares and the amount of per share realized and unrealized gains and losses
at such time.
</TABLE>
Statement of Additional Information Page 77
<PAGE>
G.T. GLOBAL FINANCIAL SERVICES FUND
NOTES TO
FINANCIAL STATEMENTS
October 31, 1994
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
G.T. Global Financial Services 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 Fund invests substantially all of
its investable assets in Global Financial Services Portfolio ("Portfolio"),
which is registered as an open-end management investment company under the 1940
Act and has investment objectives, policies and limitations substantially
identical to those of the Fund. The value of the Fund's investment in the
Portfolio reflects the Fund's proportionate interest in the net assets of the
Portfolio. The financial statements of the Portfolio, including the Portfolio of
Investments, are included elsewhere in this Report and should be read in
conjunction with the Fund's financial statements.
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) INVESTMENT VALUATION
Valuation of securities and other investment practices by the Portfolio are
discussed in Note 1 of the Portfolio's Notes to Financial Statements which are
included elsewhere in this Report.
(B) 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. The Fund currently has a capital loss carryforward of $22,442
which expires in 2002.
(C) DISTRIBUTION 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 Portfolio and timing differences.
(D) 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 $63,500. These expenses
are being amortized on a straightline basis over a five-year period.
2. RELATED PARTIES
G.T. Capital Management, Inc. ("G.T. Capital") is the Fund's administrator. The
Fund pays administration fees to G.T. Capital at the annualized rate of 0.25% of
the Fund's average daily net assets. 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 items) 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 period ended October 31, 1994, G.T. Global retained
$4,672 of such sales charges. G.T. Global also makes ongoing shareholder
servicing and trail commission payments to dealers whose clients hold Class A
shares.
Statement of Additional Information Page 78
<PAGE>
G.T. GLOBAL FINANCIAL SERVICES FUND
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 period ended October 31,
1994, G.T. Global collected CDSCs in the amount of $847. 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 plans of distribution 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 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.
Statement of Additional Information Page 79
<PAGE>
G.T. GLOBAL FINANCIAL SERVICES FUND
3. 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
Emerging Markets 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
Strategic Income 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 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>
MAY 31, 1994
(COMMENCEMENT OF
OPERATIONS)
TO OCTOBER 31, 1994
---------------------
CLASS A SHARES AMOUNT
- ---------------------------------------------------------------------------------------------------- --------- ----------
<S> <C> <C>
Shares sold......................................................................................... 288,905 $3,352,036
Shares repurchased.................................................................................. (20,084) (233,975)
--------- ----------
Net increase........................................................................................ 268,821 $3,118,061
--------- ----------
--------- ----------
<CAPTION>
MAY 31, 1994
(COMMENCEMENT OF
OPERATIONS)
TO OCTOBER 31, 1994
---------------------
CLASS B SHARES AMOUNT
- ---------------------------------------------------------------------------------------------------- --------- ----------
<S> <C> <C>
Shares sold......................................................................................... 198,242 $2,299,967
Shares repurchased.................................................................................. (9,906) (113,979)
--------- ----------
Net increase........................................................................................ 188,336 $2,185,988
--------- ----------
--------- ----------
</TABLE>
Statement of Additional Information Page 80
<PAGE>
GLOBAL FINANCIAL SERVICES PORTFOLIO
REPORT OF
INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
ANNUAL REPORT
To the Shareholders and Board of Trustees of
Global Financial Services Portfolio:
We have audited the accompanying statement of assets and liabilities of Global
Financial Services Portfolio, including the schedule of portfolio investments,
as of October 31, 1994 and the related statement of operations, statement of
changes in net assets and supplementary data for the period from May 31, 1994
(commencement of operations) to October 31, 1994. These financial statements and
the supplementary data are the responsibility of the Portfolio's management. Our
responsibility is to express an opinion on these financial statements and the
supplementary data based on our audit.
We conducted our audit 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 supplementary data 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. 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
audit provides a reasonable basis for our opinion.
In our opinion, the financial statements and the supplementary data referred to
above present fairly, in all material respects, the financial position of Global
Financial Services Portfolio as of October 31, 1994 and the results of its
operations, the changes in its net assets and the supplementary data for the
period from May 31, 1994 (commencement of operations) to October 31, 1994, in
conformity with generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
BOSTON, MASSACHUSETTS
DECEMBER 16, 1994
Statement of Additional Information Page 81
<PAGE>
GLOBAL FINANCIAL SERVICES PORTFOLIO
PORTFOLIO OF INVESTMENTS
October 31, 1994
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Equity Market % of Net
Investments Country Shares Value Assets(a)
<S> <C> <C> <C> <C>
- --------------------------------------------------------------------
Banks-Regional (50.6%)
- ----------------------------------------
Bank of Ireland IRL 59,500 $274,493 5.3
BayBanks, Inc. US 4,400 254,100 4.8
Banco
Commercial
S.A. 144A ADR
(b)(c)(d) URGY 12,000 238,500 4.6
Amalgamated
Banks of South
Africa S AFR 90,900 232,350 4.5
Banco Nacional
S.A.
(Preferred) BRZL 7,500,000 204,203 3.9
The Thai
Farmers Bank,
Ltd. (Foreign) THAI 22,500 198,636 3.8
West One
Bancorp US 7,000 192,500 3.7
Bangkok Bank
Public Co.
Ltd. (Foreign) THAI 14,700 159,270 3.1
Uniao Bancos
Brasileiros -
Unibanco
(Preferred
"A") BRZL 5,000,000 158,170 3.1
Mellon Bank
Corporation US 2,000 111,250 2.1
Banco Wiese ADR
(b)(c) PERU 5,000 106,250 2.1
Grupo
Financiero
Banamex
Accival, S.A.
de C.V. "C" MEX 14,000 96,270 1.9
Den Danske Bank DEN 1,500 80,599 1.6
Benson
Financial
Corporation
(c) US 6,000 72,000 1.4
Westpac Banking
Corporation
Ltd. AUSL 20,000 67,167 1.3
<CAPTION>
Equity Market % of Net
Investments Country Shares Value Assets(a)
<S> <C> <C> <C> <C>
- --------------------------------------------------------------------
Banco Bradesco
de
Investimento
S.A.
(Preferred) BRZL 6,200,000 $58,032 1.1
Zions Bancor-
poration US 1,500 56,438 1.1
Unidanmark AS
"A" DEN 1,300 52,168 1.0
Glacier
Bancorp, Inc. US 500 8,875 0.2
------------
2,621,271
------------
Other Financial (14.3%)
- ----------------------------------------
House of
Investments,
Inc. PHIL 128,000 268,387 5.2
First Data
Corporation US 4,100 205,513 4.0
Dean Witter
Discover and
Company US 3,000 115,875 2.2
Transaction
Network
Service (c) US 6,000 78,750 1.5
First Financial
Caribbean
Corporation US 6,400 73,600 1.4
------------
742,125
------------
Real Estate Investment Trust (10.9%)
- ----------------------------------------
Evans
Withycombe
Residential,
Inc. US 13,000 256,750 5.0
JP Realty Inc. US 7,700 151,113 2.9
Alexander
Haagen
Properties,
Inc. US 5,300 85,463 1.6
Macerich
Company (The) US 2,600 52,000 1.0
Shugard Storage
Centers, Inc.
"A" US 1,000 21,250 0.4
------------
566,576
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 82
<PAGE>
GLOBAL FINANCIAL SERVICES PORTFOLIO
<TABLE>
<CAPTION>
Equity Market % of Net
Investments Country Shares Value Assets(a)
- --------------------------------------------------------------------
<S> <C> <C> <C> <C>
Banks-Super Regional (8.5%)
- ----------------------------------------
First
Interstate
Bancorp US 3,000 $240,000 4.7
BankAmerica
Corporation US 2,500 108,750 2.1
Banc One
Corporation US 3,000 86,625 1.7
------------
435,375
------------
Banks-Money Center (3.7%)
- ----------------------------------------
National
Westminster
Bank PLC UK 14,800 121,760 2.3
Citicorp US 1,500 71,625 1.4
------------
193,385
------------
Country Funds (2.7%)
- ----------------------------------------
Korean
Investment
Fund, Inc.
(b)(c) KOR 3,400 46,750 0.9
Korea Fund,
Inc. (b) KOR 1,900 46,075 0.9
Korea Equity
Fund (b)(c) KOR 4,700 45,238 0.9
------------
138,063
------------
<CAPTION>
Equity Market % of Net
Investments Country Shares Value Assets(a)
<S> <C> <C> <C> <C>
- --------------------------------------------------------------------
Investment Management (2.5%)
- ----------------------------------------
M & G Group PLC UK 3,500 $54,999 1.1
Franklin
Resources,
Inc. US 1,000 40,875 0.8
Eaton Vance
Corporation US 1,000 31,625 0.6
------------
127,499
------------
Consumer Finance (2.1%)
- ----------------------------------------
Green Tree
Financial
Corporation US 4,000 109,500 2.1
Insurance-Life (1.5%)
- ----------------------------------------
Kemper
Corporation US 1,500 78,375 1.5
- --------------------------------------------------------------------
- --------------------------------------------------------------------
Total Equity Investments
(cost $4,979,479)*..................... 5,012,169 96.8
Other Assets Less Liabilities........... 163,666 3.2
- --------------------------------------------------------------------
- --------------------------------------------------------------------
Net Assets.............................. $5,175,835 100.0
- --------------------------------------------------------------------
- --------------------------------------------------------------------
<FN>
- --------------------------------------------------------------------------------
(a) Percentages indicated are based on net assets of $5,175,835.
(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.
Abbreviation:
ADR -- American Depository Receipt
* For Federal income tax purposes, cost is $4,982,857 and appreciation
(depreciation) of securities is as follows:
Unrealized appreciation: $ 189,457
Unrealized depreciation: (160,145)
---------
Net unrealized
appreciation: $ 29,312
---------
---------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 83
<PAGE>
GLOBAL FINANCIAL SERVICES PORTFOLIO
The Fund's portfolio of investments at October 31, 1994, was concentrated in the
following countries:
<TABLE>
<CAPTION>
Percentage of Net Assets(a)
-----------------------------------
Country Equity Other Total
- ----------------------------------- ----------- ----------- ---------
<S> <C> <C> <C>
Australia 1.3 1.3
Brazil 8.1 8.1
Denmark 2.6 2.6
Ireland 5.3 5.3
Korea 2.7 2.7
Mexico 1.9 1.9
Peru 2.1 2.1
Philippines 5.2 5.2
South Africa 4.5 4.5
Thailand 6.9 6.9
UK 3.4 3.4
U.S. 48.2 3.2 51.4
Uruguay 4.6 4.6
--- --- ---------
Total 96.8 3.2 100.0
--- --- ---------
--- --- ---------
<FN>
- ----------------
(a) Percentages indicated are based on net assets of $5,175,835.
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 84
<PAGE>
GLOBAL FINANCIAL SERVICES PORTFOLIO
STATEMENT OF ASSETS
AND LIABILITIES
October 31, 1994
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Assets:
Investments in securities, at value (cost $4,979,479) (Note 1).........................................
$5,012,169
Foreign Currency (cost $767)...........................................................................
774
Receivable for securities sold.........................................................................
237,232
Unamortized deferred organizational expenses (Note 1)..................................................
22,917
Dividends receivable...................................................................................
9,501
Cash held as collateral for securities loaned (Note 1).................................................
48,000
----------
Total assets...........................................................................................
5,330,593
----------
Liabilities:
Due to Custodian.......................................................................................
54,321
Payable for deferred organizational expenses...........................................................
25,000
Payable for professional fees..........................................................................
11,889
Payable for printing and postage expenses..............................................................
5,757
Payable for investment management and administration fees (Note 2).....................................
4,293
Payable for Trustees' fees (Note 2)....................................................................
2,141
Accrued expenses.......................................................................................
3,357
Collateral for securities loaned (Note 1)..............................................................
48,000
----------
Total liabilities......................................................................................
154,758
----------
Net assets...............................................................................................
$5,175,835
----------
----------
Net assets consist of:
Paid in capital........................................................................................
$5,189,271
Accumulated net investment loss........................................................................
(13,695)
Accumulated net realized loss on investments and foreign currency conversions..........................
(32,440)
Net unrealized appreciation of investments.............................................................
32,699
----------
Total -- representing net assets applicable to shares of beneficial interest outstanding...............
$5,175,835
----------
----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 85
<PAGE>
GLOBAL FINANCIAL SERVICES PORTFOLIO
STATEMENT OF OPERATIONS
May 31, 1994 (commencement of operations) to October 31, 1994
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Investment income (Note 1):
Dividends................................................................................................. $ 23,933
Interest.................................................................................................. 13,042
---------
Total investment income................................................................................... 36,975
---------
Expenses:
Professional fees......................................................................................... 20,370
Investment management and administration fees (Note 2).................................................... 8,249
Custodian fees............................................................................................ 7,880
Printing and postage expenses............................................................................. 7,650
Trustees' fees (Note 2)................................................................................... 2,908
Amortization of organizational expenses (Note 1).......................................................... 2,083
Other..................................................................................................... 1,530
---------
Total expenses............................................................................................ 50,670
---------
Net investment loss......................................................................................... (13,695)
---------
Net realized and unrealized gain (loss) on investments and foreign currencies (Note 1):
Net realized loss on investments............................................................... $ (25,821)
Net realized loss on foreign currency conversions.............................................. (6,619)
---------
Net realized loss......................................................................................... (32,440)
Increase in unrealized appreciation on investments........................................................ 32,699
---------
Net realized and unrealized gain on investments and foreign currency conversions............................ 259
---------
Net decrease in net assets resulting from operations........................................................ $ (13,436)
---------
---------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 86
<PAGE>
GLOBAL FINANCIAL SERVICES PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MAY 31, 1994
(COMMENCEMENT OF OPERATIONS)
TO OCTOBER 31, 1994
-----------------------------
<S> <C>
Increase in net assets
Operations:
Net investment loss................................................................................
$ (13,695)
Net realized loss on investments and foreign currency conversions..................................
(32,440)
Increase in unrealized appreciation of investments.................................................
32,699
-----------
Net decrease in net asssets resulting from operations..............................................
(13,436)
Beneficial interest transactions:
Contributions......................................................................................
5,089,171
Withdrawals........................................................................................
0
-----------
Net increase from beneficial interest transactions.................................................
5,089,171
-----------
Total increase in net assets.........................................................................
5,075,735
Net assets:
Beginning of period................................................................................
100,100
-----------
End of period*.....................................................................................
$ 5,175,835
-----------
-----------
<FN>
- ----------------
* Includes accumulated net investment loss of $(13,695).
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 87
<PAGE>
GLOBAL FINANCIAL SERVICES PORTFOLIO
SUPPLEMENTARY DATA
- --------------------------------------------------------------------------------
Contained below are ratios and supplemental data that have been derived from
information provided in the financial statements.
<TABLE>
<CAPTION>
MAY 31, 1994
(COMMENCEMENT OF OPERATIONS)
TO OCTOBER 31, 1994
-----------------------------
<S> <C>
Ratios and supplemental data:
Net assets, end of period (in 000's)................................................................. $ 5,176
Ratio of net investment income to average net assets................................................. 1.19%(a)
Ratio of operating expenses to average net assets.................................................... 4.43%(a)
Portfolio turnover rate.............................................................................. 53%
<FN>
- ----------------
(a) Annualized.
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 88
<PAGE>
GLOBAL FINANCIAL SERVICES PORTFOLIO
NOTES TO
FINANCIAL STATEMENTS
October 31, 1994
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
Global Financial Services Portfolio ("Portfolio") is organized as a New York
Trust and is registered under the Investment Company Act of 1940, as amended
("1940 Act"), as a non-diversified, open-end management investment company. The
following is a summary of significant accounting policies consistently followed
by the Portfolio in the preparation of the financial statements. The policies
are in conformity with generally accepted accounting principles.
(A) PORTFOLIO VALUATION
The Portfolio calculates the net asset value of and completes orders to
purchase, exchange or repurchase Portfolio shares of beneficial interest 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
Portfolio's Board of Trustees.
Portfolio securities which are primarily traded on foreign exchanges are
generally valued at the preceding closing values of such securities on their
respective exchanges, and those values are then translated into U.S. dollars at
the current exchange 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 Portfolio's Board of Trustees.
(B) FOREIGN CURRENCY TRANSLATION
The accounting records of the Portfolio 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 Portfolio 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.
In addition, the Portfolio may focus its investments in certain related
financial services, subjecting the Portfolio to greater risk than a fund that is
more diversified.
Statement of Additional Information Page 89
<PAGE>
GLOBAL FINANCIAL SERVICES PORTFOLIO
(C) REPURCHASE AGREEMENTS
With respect to repurchase agreements entered into by the Portfolio, it is the
Portfolio's policy to always receive, as collateral, United States government
securities or other high quality debt securities of which the value, including
accrued interest, is at least equal to the amount to be paid to the Portfolio
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 Portfolio as an unrealized gain or loss. When the Forward is closed, the
Portfolio 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
Portfolio 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
Portfolio 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 Portfolio writes a call or put option, an amount equal to the premium
received is included in the Portfolio's "Statement of Assets and Liabilities" as
an asset and an equivalent liability. The amount of the liability is
subsequently marked-to-market to reflect the current market value of the option.
The current market value of an option listed on a traded exchange is valued at
its last 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 Portfolio enters into a closing purchase
transaction, a gain or loss is realized without regard to any unrealized gain or
loss on the underlying security, and the liability related to such option is
extinguished. If a written call option is exercised, a gain or loss is realized
from the sale of the underlying security and the proceeds of the sale are
increased by the premium originally received. If a written put option is
exercised, the cost of the underlying security purchased would be decreased by
the premium originally received. The Portfolio can write options only on a
covered basis, which for a call requires that the Portfolio holds the underlying
security and for a put requires the Portfolio to set aside cash, U.S. government
securities or other liquid, high-grade debt securities in an amount not less
than the exercise price or otherwise provide adequate cover at all times while
the put option is outstanding. At October 31, 1994, the Portfolio had no written
options.
The premium paid by the Portfolio for the purchase of a call or put option is
included in the Portfolio's "Statement of Assets and Liabilities" as an
investment and subsequently "marked-to-market" to reflect the current market
value of the option. If an option which the Portfolio has purchased expires on
the stipulated expiration date, the Portfolio realizes a loss in the amount of
the cost of the option. If the Portfolio enters into a closing sale transaction,
the Portfolio realizes a gain or loss, depending on whether proceeds from the
closing sale transaction are greater or less than the cost of the option. If the
Portfolio exercises a call option, the cost of the securities acquired by
exercising the call is increased by the premium paid to buy the call. If the
Portfolio exercises a put option, it realizes a gain or loss from the sale of
the underlying security, and the proceeds from such sale are decreased by the
premium originally paid. At October 31, 1994, the Portfolio had no outstanding
purchased options.
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
Portfolio is required to pledge to the broker an amount of cash or securities
equal to the minimum "initial margin" requirements of the exchange on which the
contract is traded. Pursuant to the contract, the Portfolio agrees to receive
from or pay to the broker an amount of cash equal to the daily fluctuation in
value of the contract. Such receipts or payments are known as "variation margin"
and are recorded by the Portfolio as unrealized gains or losses. When the
contract is closed, the Portfolio records a realized gain or loss equal to the
difference between the value of the contract at the time it was opened and the
value at the time it was closed. The potential risk to the Portfolio is that the
change in value of the underlying securities may not correlate to the change in
value of the contracts. At October 31, 1994, the Portfolio did not hold futures
contracts.
Statement of Additional Information Page 90
<PAGE>
GLOBAL FINANCIAL SERVICES PORTFOLIO
(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. 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 Portfolio may trade securities on other than normal
settlement terms. This may increase the risk if the other party to the
transaction fails to deliver and causes the Portfolio to subsequently invest at
less advantageous prices.
(H) PORTFOLIO SECURITIES LOANED
At October 31, 1994, stocks with an aggregate value of approximately $47,400
were on loan to brokers. The loans were secured by cash collateral of $48,000.
For international securities, cash collateral is received by the Portfolio
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 Portfolio against loaned securities in the amount
at least equal to 102% of the market value of the loaned securities at the
inception of each loan. This collateral must be maintained at not less than 100%
of the market value of the loaned securities during the period of the loan. For
the period ended October 31, 1994, the Portfolio received $50 of income from
securities lending which was used to offset the Portfolio's custody expenses.
(I) TAXES
It is the policy of the Portfolio to meet the requirements of the Internal
Revenue Code of 1986, as amended ("Code"). Therefore, no provision has been made
for Federal taxes on income, capital gains, or unrealized appreciation of
securities held.
(J) DEFERRED ORGANIZATIONAL EXPENSES
Expenses incurred by the Portfolio 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 $25,000. These expenses
are being amortized on a straightline basis over a five-year period.
(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 Portfolio'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.
(L) INDEXED SECURITIES
The Portfolio may invest in indexed securities whose value is linked either
directly or indirectly to changes in foreign currencies, interest rates,
equities, indices, or other reference instruments. Indexed securities may be
more volatile than the reference instrument itself, but any loss is limited to
the amount of the original investment.
2. RELATED PARTIES
G.T. Capital is the Portfolio's investment manager and administrator. The
Portfolio pays investment management and administration fees to G.T. Capital at
the annualized rate of 0.725% on the first $500 million of average daily net
assets of the Portfolio; 0.70% on the next $500 million; 0.675% on the next $500
million; and 0.65% on amounts thereafter. These fees are computed daily and paid
monthly.
The Portfolio pays each of its Trustees who is not an employee, officer or
director of G.T. Capital, G.T. Global Financial Services, Inc. or G.T. Global
Investor Services Inc. $500 per year plus $150 for each meeting of the board or
any committee thereof attended by the Trustees.
At October 31, 1994, all of the shares of beneficial interest of the Portfolio
were owned either by G.T. Global Financial Services Fund or G.T. Capital.
3. PURCHASES AND SALES OF SECURITIES
For the period ended October 31, 1994, purchases and sales of investment
securities by the Portfolio, other than U.S. government obligations and
short-term investments, aggregated $6,216,543 and
$1,211,277, respectively. There were no purchases or sales of U.S. government
obligations by the Portfolio for the period ended October 31, 1994.
Statement of Additional Information Page 91
<PAGE>
G.T. GLOBAL INFRASTRUCTURE 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 Infrastructure Fund, one of the funds organized as a series of G.T.
Investment Funds, Inc., as of October 31, 1994 and the related statement of
operations, statement of changes in net assets and the financial highlights for
the period ended May 31, 1994 (commencement of operations) to October 31, 1994.
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 audit.
We conducted our audit 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. 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
audit provides 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 Infrastructure Fund as of October 31, 1994, and the results of its
operations, the changes in its net assets and the financial highlights for the
period from May 31, 1994 (commencement of operations) to October 31, 1994, in
conformity with generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
BOSTON, MASSACHUSETTS
DECEMBER 16, 1994
Statement of Additional Information Page 92
<PAGE>
G.T. GLOBAL INFRASTRUCTURE FUND
STATEMENT OF ASSETS
AND LIABILITIES
October 31, 1994
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Assets:
<S> <C>
Investments in Global Infrastructure Portfolio (cost $49,997,022) (Note 1)...........................
$ 51,106,690
Receivable for Fund shares sold......................................................................
3,453,478
Receivable for expense reimbursement (Note 2)........................................................
68,271
Unamortized deferred organizational expenses (Note 1)................................................
47,208
Prepaid expenses.....................................................................................
2,044
-------------
Total assets.........................................................................................
54,677,691
-------------
Liabilities:
Payable for service and distribution expenses (Note 2)...............................................
28,736
Payable for Fund shares repurchased..................................................................
23,648
Payable for registration fees........................................................................
15,064
Payable for printing and postage expenses............................................................
12,589
Payable for professional fees........................................................................
11,029
Payable for Administration fees (Note 2).............................................................
9,243
Payable for custodian fees...........................................................................
5,194
Payable for Directors' fees (Note 2).................................................................
1,281
Accrued expenses.....................................................................................
1,421
-------------
Total liabilities....................................................................................
108,205
-------------
Net assets.............................................................................................
$ 54,569,486
-------------
-------------
Class A:
Net asset value and redemption price per share
($23,615,168 DIVIDED BY 1,893,269 shares outstanding)................................................
$ 12.47
-------------
-------------
Maximum offering price per share
(100/95.25 of $12.47)*...............................................................................
$ 13.09
-------------
-------------
Class B:+
Net asset value and offering price per share
($30,954,318 DIVIDED BY 2,486,186 shares outstanding)................................................
$ 12.45
-------------
-------------
Net assets consist of:
Paid in capital (Note 3).............................................................................
$ 53,494,717
Undistributed net investment income..................................................................
13,178
Accumulated net realized loss on investments and foreign currency conversions -- Global
Infrastructure Portfolio............................................................................
(49,221)
Net unrealized appreciation of investments, dividends receivable, interest receivable, securities
purchased and sold and foreign currency conversions -- Global Infrastructure Portfolio..............
1,110,812
-------------
Total -- representing net assets applicable to capital shares outstanding............................
$ 54,569,486
-------------
-------------
<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 93
<PAGE>
G.T. GLOBAL INFRASTRUCTURE FUND
STATEMENT OF OPERATIONS
May 31, 1994 (commencement of operations) to October 31, 1994
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Investment income (Note 1):
Dividend income -- Global Infrastructure Portfolio..................................................... $ 121,069
Interest income -- Global Infrastructure Portfolio..................................................... 104,902
----------
Total investment income................................................................................ 225,971
----------
Expenses:
Expenses -- Global Infrastructure Portfolio............................................................ 101,457
Service and distribution expenses (Note 2)
Class A.................................................................................. $ 18,271
Class B.................................................................................. 40,937 59,208
----------
Transfer agent fees (Note 2)........................................................................... 33,831
Printing and postage expenses.......................................................................... 23,570
Professional fees...................................................................................... 19,772
Administration fees (Note 2)........................................................................... 19,370
Registration fees...................................................................................... 8,112
Custodian fees......................................................................................... 5,332
Directors' fees (Note 2)............................................................................... 4,590
Amortization of organizational expenses (Note 1)....................................................... 4,292
Other.................................................................................................. 1,530
----------
Total expenses before expense reimbursement............................................................ 281,064
Less expense reimbursement (Note 2).................................................................... (68,271)
----------
Total expenses......................................................................................... 212,793
----------
Net investment income.................................................................................... 13,178
----------
Net realized and unrealized loss on investments and foreign currencies (Note 1):
Net realized loss on investments -- Global Infrastructure Portfolio........................ (27,320)
Net realized loss on foreign currency conversions -- Global Infrastructure Portfolio....... (21,901)
----------
Net realized loss...................................................................................... (49,221)
Increase in unrealized appreciation of dividends receivable, interest receivable,
securities purchased and sold, and foreign currency conversions -- Global Infrastructure
Portfolio................................................................................. 1,144
Increase in unrealized appreciation of investments -- Global Infrastructure Portfolio...... 1,109,668
----------
Net unrealized appreciation............................................................................ 1,110,812
----------
Net realized and unrealized gain on investments and foreign currency conversions -- Global Infrastructure
Portfolio............................................................................................... 1,061,591
----------
Net increase in net assets resulting from operations..................................................... $1,074,769
----------
----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 94
<PAGE>
G.T. GLOBAL INFRASTRUCTURE FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MAY 31, 1994
(COMMENCEMENT OF OPERATIONS)
TO OCTOBER 31, 1994
-----------------------------
<S> <C>
Increase in net assets
Operations:
Net investment income..............................................................................
$ 13,178
Net realized loss on investments and foreign currency conversions -- Global Infrastructure
Portfolio.........................................................................................
(49,221)
Increase in unrealized appreciation of investments, dividends receivable, interest receivable,
securities purchased and sold and foreign currency conversions -- Global Infrastructure
Portfolio.........................................................................................
1,110,812
------------
Net increase in net asssets resulting from investment operations...................................
1,074,769
Capital Share Transactions (Note 3):
Increase from shares sold and reinvested...........................................................
55,939,368
Decrease from shares repurchased...................................................................
(2,544,651)
------------
Net increase from capital share transactions.......................................................
53,394,717
------------
Total increase in net assets.........................................................................
54,469,486
Net assets:
Beginning of period................................................................................
100,000
------------
End of period......................................................................................
$ 54,569,486*
------------
------------
<FN>
- ----------------
* Includes undistributed net investment income of $13,178.
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 95
<PAGE>
G.T. GLOBAL INFRASTRUCTURE FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout the period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
CLASS A CLASS B
---------------------------- ----------------------------
MAY 31, 1994 MAY 31, 1994
(COMMENCEMENT OF OPERATIONS) (COMMENCEMENT OF OPERATIONS)
TO OCTOBER 31, 1994 TO OCTOBER 31, 1994
---------------------------- ----------------------------
<S> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of the period............................. $ 11.43 $ 11.43
-------- --------
Income from investment operations:
Net investment income (loss)....................................... 0.01* (0.01)*
Net realized and unrealized gain on investments.................... 1.03 1.03
-------- --------
Net increase from investment operations............................ 1.04 1.02
-------- --------
Net asset value, end of period....................................... $ 12.47 $ 12.45
-------- --------
-------- --------
Total investment return (c).......................................... 9.10%(b) 8.92%(b)
Ratios and supplemental data:
Net assets, end of period (in 000's)................................. $23,615 $30,954
Ratio of net investment income (loss) to average net assets.......... 0.41%(a)* (0.09)%(a)*
Ratio of net expenses to average net assets.......................... 2.40%(a)* 2.90%(a)*
<FN>
- ----------------
(a) Annualized.
(b) Not annualized.
(c) Total investment return does not include sales charges.
* The annualized ratios of operating expenses and net investment income to
average net assets for Class A and Class B before reimbursement by G.T.
Capital Management, Inc. for the period ended October 31, 1994 would have
been 3.28% and (0.47)%; and 3.78% and (0.97)%, respectively. The net
investment income per share would have been reduced by $0.02 for each
class.
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 96
<PAGE>
G.T. GLOBAL INFRASTRUCTURE FUND
NOTES TO
FINANCIAL STATEMENTS
October 31, 1994
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
G.T. Global Infrastructure 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 Fund invests substantially all of its investable assets in
Global Infrastructure Portfolio ("Portfolio"), which is registered as an
open-end management investment company under the 1940 Act and has investment
objectives, policies and limitations substantially identical to those of the
Fund. The value of the Fund's investment in the Portfolio reflects the Fund's
proportionate interest in the net assets of the Portfolio. The financial
statements of the Portfolio, including the Portfolio of Investments, are
included elsewhere in this Report and should be read in conjunction with the
Fund's financial statements.
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) INVESTMENT VALUATION
Valuation of securities and other investment practices by the Portfolio are
discussed in Note 1 of the Portfolio's Notes to Financial Statements which are
included elsewhere in this Report.
(B) 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. The Fund currently has a capital loss carryforward of $26,214
which expires in 2002.
(C) DISTRIBUTION 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 Portfolio and timing differences.
(D) 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 $51,500. These expenses
are being amortized on a straightline basis over a five-year period.
2. RELATED PARTIES
G.T. Capital Management, Inc. ("G.T. Capital") is the Fund's administrator. The
Fund pays administration fees to G.T. Capital at the annualized rate of 0.25% of
the Fund's average daily net assets. 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 period ended October 31, 1994, G.T. Global retained
$51,215 of such sales charges. G.T. Global also makes ongoing shareholder
servicing and trail commission payments to dealers whose clients hold Class A
shares.
Statement of Additional Information Page 97
<PAGE>
G.T. GLOBAL INFRASTRUCTURE FUND
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 period ended October 31,
1994, G.T. Global collected CDSCs in the amount of $1,528. 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 plans of distribution 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 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.
Statement of Additional Information Page 98
<PAGE>
G.T. GLOBAL INFRASTRUCTURE FUND
3. 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
Emerging Markets 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
Strategic Income 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 Natural
Resources 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 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>
MAY 31, 1994
(COMMENCEMENT OF
OPERATIONS)
TO OCTOBER 31, 1994
----------------------
CLASS A SHARES AMOUNT
- ----------------------------------------------------------------------------------------------------------- --------- -----------
<S> <C> <C>
Shares sold................................................................................................ 2,020,133 $24,648,202
Shares repurchased......................................................................................... (131,239) (1,614,053)
--------- -----------
Net increase............................................................................................... 1,888,894 $23,034,149
--------- -----------
--------- -----------
<CAPTION>
MAY 31, 1994
(COMMENCEMENT OF
OPERATIONS)
TO OCTOBER 31, 1994
----------------------
CLASS B SHARES AMOUNT
- ----------------------------------------------------------------------------------------------------------- --------- -----------
<S> <C> <C>
Shares sold................................................................................................ 2,557,551 $31,291,166
Shares repurchased......................................................................................... (75,739) (930,598)
--------- -----------
Net increase............................................................................................... 2,481,812 $30,360,568
--------- -----------
--------- -----------
</TABLE>
Statement of Additional Information Page 99
<PAGE>
GLOBAL INFRASTRUCTURE PORTFOLIO
REPORT OF
INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
ANNUAL REPORT
To the Shareholders and Board of Trustees of
Global Infrastructure Portfolio:
We have audited the accompanying statement of assets and liabilities of Global
Infrastructure Portfolio, including the schedule of portfolio investments, as of
October 31, 1994 and the related statement of operations, statement of changes
in net assets and supplementary data for the period from May 31, 1994
(commencement of operations) to October 31, 1994. These financial statements and
the supplementary data are the responsibility of the Portfolio's management. Our
responsibility is to express an opinion on these financial statements and the
supplementary data based on our audit.
We conducted our audit 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 supplementary data 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 audit provides a reasonable basis for our opinion.
In our opinion, the financial statements and the supplemenatary data referred to
above present fairly, in all material respects, the financial position of Global
Infrastructure Portfolio as of October 31, 1994 and the results of its
operations, the changes in its net assets and the supplementary data for the
period from May 31, 1994 (commencement of operations) to October 31, 1994, in
conformity with generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
BOSTON, MASSACHUSETTS
DECEMBER 16, 1994
Statement of Additional Information Page 100
<PAGE>
GLOBAL INFRASTRUCTURE PORTFOLIO
PORTFOLIO OF INVESTMENTS
October 31, 1994
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market % of Net
Equity Investments Country Shares Value Assets(a)
<S> <C> <C> <C> <C>
- -----------------------------------------------------------------------------
Electrical & Gas Utilities (21.0%)
- ------------------------------------------------
Korea Electric Power
ADR (b) KOR 74,900 $1,460,550 2.8
Companhia Energetica de
Minas Gerais (Cemig)
ADR (b)(c)(d) BRZL 50,000 1,323,895 2.6
EVN (Energie Versorgung
Niedr) ASTRI 9,000 1,131,858 2.2
Capex S.A. (c) ARG 110,000 1,068,473 2.1
Empresa Nacional de
Electridad S.A.
(Endesa) ADR (b) SPN 23,100 1,059,713 2.1
Edison S.P.A. ITLY 245,000 1,048,350 2.1
Chilegener S.A. ADR (b) CHLE 35,000 988,750 1.9
Consolidated Electric
Power Asia HK 350,000 817,587 1.6
AES China Generating
Co. Ltd. Class A (c) US 54,100 608,625 1.2
Huaneng Power
International, Inc.
ADR (b)(c) CHNA 30,000 555,000 1.1
Bolivian Power (b) BOL 22,000 533,500 1.0
Hong Kong Electric HK 43,000 135,227 0.3
-------------
10,731,528
-------------
Telephone Networks (15.3%)
- ------------------------------------------------
Stet (Societa
Finanziara Telefonica)
Savings ITLY 532,000 1,316,378 2.6
Telecomunicacoes
Brasileiras S.A. -
Telebras Sponsored ADR
(b) BRZL 23,113 1,190,320 2.3
Telefonica de Espana
ADR (b) SPN 28,000 1,134,120 2.2
Telecom Corporation of
New Zealand Ltd. ADR
(b) NZ 20,000 1,112,500 2.2
PT Indonesia Satellite
(Indosat) ADR (b)(c) INDO 27,000 1,059,750 2.1
Telefonos de Mexico,
S.A. de C.V. "L" ADR
(b) MEX 16,000 882,000 1.7
<CAPTION>
Market % of Net
Equity Investments Country Shares Value Assets(a)
<S> <C> <C> <C> <C>
- -----------------------------------------------------------------------------
Pakistan Telecommu-
nications Company Ltd.
(c): PAK -- -- 1.4
Common -- 2,800 $445,912 --
Vouchers 144A (b)(d) -- 1,392 230,376 --
Telecom Argentina S.A.
"B" ARG 63,000 383,385 0.8
-------------
7,754,741
-------------
Cement (12.4%)
- ------------------------------------------------
Siam Cement Co. Ltd.
(Foreign) THAI 24,000 1,384,912 2.7
Cementos Paz del Rio.
S.A. 144A ADR (b)(d) COL 48,500 1,200,375 2.3
Giant Cement Holdings,
Inc. (c) US 75,000 1,050,000 2.1
La Cemento Nacional
144A GDR (b)(c)(d) ECDR 3,000 1,050,000 2.1
Lone Star Industries,
Inc. US 50,000 968,555 1.9
Corporacion Cementera
Argentina S.A.
(Corcemar) (c) ARG 43,247 359,272 0.7
PT Semen Cibinong
(Foreign) INDO 86,000 304,880 0.6
-------------
6,317,994
-------------
Telecom Equipment (11.4%)
- ------------------------------------------------
Nokia AB (Preferred)
ADR (b)(c) FIN 21,200 1,592,650 3.1
Motorola, Inc. US 20,000 1,177,500 2.3
Allgon AB-B Free SWDN 50,000 1,127,286 2.2
BroadBand Technologies,
Inc. (c) US 40,000 1,035,000 2.0
Champion Technology
Holdings HK 2,800,000 905,912 1.8
-------------
5,838,348
-------------
Machinery & Engineering (6.3%)
- ------------------------------------------------
Mannesmann AG GER 5,200 1,390,541 2.7
Caterpillar, Inc. US 20,000 1,195,180 2.3
United Engineers
(Malaysia) Ltd. MAL 125,000 675,279 1.3
-------------
3,261,000
-------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 101
<PAGE>
GLOBAL INFRASTRUCTURE PORTFOLIO
<TABLE>
<CAPTION>
Market % of Net
Equity Investments Country Shares Value Assets(a)
- -----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Transportation - Road & Rail (5.9%)
- ------------------------------------------------
ABC Rail Products
Corporation (c) US 60,000 $1,335,438 2.6
Conrail, Inc. US 22,000 1,198,088 2.3
East Japan Railway Co. JPN 95 473,823 0.9
Covenant Transport Inc.
Class A US 2,300 43,700 0.1
-------------
3,051,049
-------------
Electrical Plant/Equipment (3.8%)
- ------------------------------------------------
ASEA AB-B Free SWDN 16,700 1,213,210 2.4
E.R.G. Australia
Limited (c) AUSL 400,000 725,165 1.4
-------------
1,938,375
-------------
Construction (3.6%)
- ------------------------------------------------
Fluor Corporation US 22,000 1,089,168 2.1
Grupo Tribasa, S.A. de
C.V. Sponsored ADR
(b)(c) MEX 25,000 784,375 1.5
-------------
1,873,543
-------------
Telephone - Long Distance (3.5%)
- ------------------------------------------------
IDB Communications
Group, Inc. (c) US 191,000 1,766,750 3.5
Wireless Communications (2.7%)
- ------------------------------------------------
Centennial Cellular
Corporation Class A
(c) US 80,000 1,400,000 2.7
Conglomerate (2.2%)
- ------------------------------------------------
General Electric
Company US 23,000 1,124,994 2.2
<CAPTION>
Market % of Net
Equity Investments Country Shares Value Assets(a)
<S> <C> <C> <C> <C>
- -----------------------------------------------------------------------------
Metals - Steel (2.1%)
- ------------------------------------------------
Hylsamex S.A. de C.V.
144A ADR (b)(d) MEX 49,000 $1,078,000 2.1
Gas Production & Distribution (2.0%)
- ------------------------------------------------
Williams Companies,
Inc. US 36,000 1,044,000 2.0
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
Total Equity Investments
(cost $45,920,654)............................. 47,180,322 92.2
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
<CAPTION>
Fixed Income Principal
Investment Currency Amount
<S> <C> <C> <C> <C>
- ------------------------------------------------
Philippines Corporate Bond (1.7%)
- ------------------------------------------------
International Container
Terminal Services,
Conv. Bond, 5% due
9/15/01 144A (d) (cost
$1,000,000) USD 1,000,000 850,000 1.7
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
<CAPTION>
Short-Term Investment
- -----------------------
<S> <C> <C> <C> <C>
Repurchase Agreement (17.3%)
- ------------------------------------------------
Dated October 31, 1994 with State Street Bank &
Trust Company, due November 1, 1994, for an
effective yield of 4.7% collateralized by
$9,000,000 Federal Home Loan Mortgage
Corporation Note, 6% due 5/15/20. (Market value
$8,865,000, including accrued interest.) (cost
$8,820,151).................................... 8,820,151 17.3
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
Total Investments (cost $55,740,805)*........... 56,850,473 111.2
Liabilities Less Other Assets................... (5,743,683) (11.2 )
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
Net Assets...................................... $51,106,790 100.0
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
<FN>
- --------------------------------------------------------------------------------
(a) Percentages indicated are based on net assets of $51,106,790.
(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.
Abbreviations:
ADR -- American Depository Receipt
GDR -- Global Depository Receipt
* For Federal income tax purposes, cost is $55,740,805 and appreciation
(depreciation) of securities is as follows:
Unrealized appreciation: $2,286,910
Unrealized depreciation: (1,177,242)
----------
Net unrealized
appreciation: $1,109,668
----------
----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 102
<PAGE>
GLOBAL INFRASTRUCTURE PORTFOLIO
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 3.6 3.6
Austria 2.2 2.2
Australia 1.4 1.4
Bolivia 1.0 1.0
Brazil 4.9 4.9
Chile 1.9 1.9
China 1.1 1.1
Colombia 2.3 2.3
Ecuador 2.1 2.1
Finland 3.1 3.1
Germany 2.7 2.7
Hong Kong 3.7 3.7
Indonesia 2.7 2.7
Italy 4.7 4.7
Japan 0.9 0.9
Korea 2.8 2.8
Malaysia 1.3 1.3
Mexico 5.3 5.3
New Zealand 2.2 2.2
Pakistan 1.4 1.4
Philippines 1.7 1.7
Spain 4.3 4.3
Sweden 4.6 4.6
Thailand 2.7 2.7
U.S. 29.3 17.3 (11.2) 35.4
--
--- --- ----- ---------
Total 92.2 1.7 17.3 (11.2) 100.0
--
--
--- --- ----- ---------
--- --- ----- ---------
<FN>
- ----------------
(a) Percentages indicated are based on net assets of $51,106,790.
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 103
<PAGE>
GLOBAL INFRASTRUCTURE PORTFOLIO
STATEMENT OF ASSETS
AND LIABILITIES
October 31, 1994
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Assets:
Investments in securities, at value (cost $46,920,654) (Note 1)...................................... $ 48,030,322
Repurchase agreements (cost $8,820,151) (Note 1)..................................................... 8,820,151
Foreign currency (cost $133,633)..........................................................
$ 132,697
U.S. currency.............................................................................
177 132,874
---------
Receivable for securities sold....................................................................... 2,554,855
Dividends receivable................................................................................. 92,438
Unamortized deferred organizational expenses (Note 1)................................................ 22,917
Interest receivable.................................................................................. 6,389
Prepaid expenses..................................................................................... 234
Cash held as collateral for securities loaned (Note 1)............................................... 3,542,400
-------------
Total assets......................................................................................... 63,202,580
-------------
Liabilities:
Payable for securities purchased..................................................................... 8,476,673
Payable for investment management and administration fees (Note 2)................................... 32,978
Payable for deferred organizational expenses......................................................... 25,000
Payable for professional fees........................................................................ 12,040
Payable for Trustees' fees (Note 2).................................................................. 1,368
Accrued expenses..................................................................................... 5,331
Collateral for securities loaned (Note 1)............................................................ 3,542,400
-------------
Total liabilities.................................................................................... 12,095,790
-------------
Net assets............................................................................................. $ 51,106,790
-------------
-------------
Net assets consist of:
Paid in capital...................................................................................... $ 49,920,685
Undistributed net investment income.................................................................. 124,514
Accumulated net realized loss on investments and foreign currency conversions........................ (49,221)
Net unrealized appreciation of investments, dividends receivable, interest receivable, securities
purchased and sold and foreign currency conversions................................................. 1,110,812
-------------
Total -- representing net assets applicable to shares of beneficial interest outstanding............. $ 51,106,790
-------------
-------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 104
<PAGE>
GLOBAL INFRASTRUCTURE PORTFOLIO
STATEMENT OF OPERATIONS
May 31, 1994 (commencement of operations) to October 31, 1994
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Investment income (Note 1):
Dividend (net of withholding tax of $5,467)............................................................ $ 121,069
Interest............................................................................................... 104,902
----------
Total investment income................................................................................ 225,971
----------
Expenses:
Investment management and administration fees (Note 2)................................................. 51,922
Professional fees...................................................................................... 18,770
Custodian fees (Note 1)................................................................................ 14,594
Printing and postage expenses.......................................................................... 9,650
Amortization of organizational expenses (Note 1)....................................................... 2,083
Trustees' fees (Note 2)................................................................................ 2,908
Other.................................................................................................. 1,530
----------
Total expenses......................................................................................... 101,457
----------
Net investment income.................................................................................... 124,514
----------
Net realized and unrealized loss on investments and foreign currencies (Note 1):
Net realized loss on investments........................................................... $ (27,320)
Net realized loss on foreign currency conversions.......................................... (21,901)
----------
Net realized loss...................................................................................... (49,221)
Increase in unrealized appreciation of dividends receivable, interest receivable,
securities purchased and sold, and foreign currency conversions........................... 1,144
Increase in unrealized appreciation of investments......................................... 1,109,668
----------
Net unrealized appreciation............................................................................ 1,110,812
----------
Net realized and unrealized gain on investments and foreign currency conversions......................... 1,061,591
----------
Net increase in net assets resulting from operations..................................................... $1,186,105
----------
----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 105
<PAGE>
GLOBAL INFRASTRUCTURE PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MAY 31, 1994
(COMMENCEMENT OF OPERATIONS)
TO OCTOBER 31, 1994
-----------------------------
<S> <C>
Increase in net assets
Operations:
Net investment income..............................................................................
$ 124,514
Net realized loss on investments and foreign currency conversions..................................
(49,221)
Increase in unrealized appreciation of investments, dividends receivable, interest receivable,
securities purchased and sold and foreign currency conversions....................................
1,110,812
------------
Net increase in net asssets resulting from operations..............................................
1,186,105
Beneficial interest transactions:
Contributions......................................................................................
52,494,964
Withdrawals........................................................................................
(2,674,379)
------------
Net increase from beneficial interest transactions.................................................
49,820,585
------------
Total increase in net assets.........................................................................
51,006,690
Net assets:
Beginning of period................................................................................
100,100
------------
End of period......................................................................................
$ 51,106,790*
------------
------------
<FN>
- ----------------
* Includes undistributed net investment income of $124,514.
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 106
<PAGE>
GLOBAL INFRASTRUCTURE PORTFOLIO
SUPPLEMENTARY DATA
- --------------------------------------------------------------------------------
Contained below are ratios and supplemental data that have been derived from
information provided in the financial statements.
<TABLE>
<CAPTION>
MAY 31, 1994
(COMMENCEMENT OF OPERATIONS)
TO OCTOBER 31, 1994
-----------------------------
<S> <C>
Ratios and supplemental data:
Net assets, end of period (in 000's)................................................................. $ 51,107
Ratio of net investment income to average net assets................................................. 1.44%(a)
Ratio of expenses to average net assets.............................................................. 1.17%(a)
Portfolio turnover rate.............................................................................. 18%
<FN>
- ----------------
(a) Annualized.
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 107
<PAGE>
GLOBAL INFRASTRUCTURE PORTFOLIO
NOTES TO
FINANCIAL STATEMENTS
October 31, 1994
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
Global Infrastructure Portfolio ("Portfolio") is organized as a New York Trust
and is registered under the Investment Company Act of 1940, as amended ("1940
Act"), as a non-diversified, open-end management investment company. The
following is a summary of significant accounting policies consistently followed
by the Portfolio in the preparation of the financial statements. The policies
are in conformity with generally accepted accounting principles.
(A) PORTFOLIO VALUATION
The Portfolio calculates the net asset value of and completes orders to
purchase, exchange or repurchase Portfolio shares of beneficial interest 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 fluctuations, 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
Portfolio's Board of Trustees.
Portfolio securities which are primarily traded on foreign exchanges are
generally valued at the preceding closing values of such securities on their
respective exchanges, and those values are then translated into U.S. dollars at
the current exchange 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 Portfolio's Board of Trustees.
(B) FOREIGN CURRENCY TRANSLATION
The accounting records of the Portfolio 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 Portfolio 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 Portfolio 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 Portfolio'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.
In addition, the Portfolio may focus its investments in certain related
infrastructure industries, subjecting the Portfolio to greater risk than a fund
that is more diversified.
Statement of Additional Information Page 108
<PAGE>
GLOBAL INFRASTRUCTURE PORTFOLIO
(C) REPURCHASE AGREEMENTS
With respect to repurchase agreements entered into by the Portfolio, it is the
Portfolio's policy to always receive, as collateral, United States government
securities or other high quality debt securities of which the value, including
accrued interest, is at least equal to the amount to be paid to the Portfolio
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 Portfolio as an unrealized gain or loss. When the Forward is closed, the
Portfolio 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
Portfolio 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
Portfolio 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 Portfolio writes a call or put option, an amount equal to the premium
received is included in the Portfolio's "Statement of Assets and Liabilities" as
an asset and an equivalent liability. The amount of the liability is
subsequently marked-to-market to reflect the current market value of the option.
The current market value of an option listed on a traded exchange is valued at
its last 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 Portfolio enters into a closing purchase
transaction, a gain or loss is realized without regard to any unrealized gain or
loss on the underlying security, and the liability related to such option is
extinguished. If a written call option is exercised, a gain or loss is realized
from the sale of the underlying security and the proceeds of the sale are
increased by the premium originally received. If a written put option is
exercised, the cost of the underlying security purchased would be decreased by
the premium originally received. The Portfolio can write options only on a
covered basis, which for calls requires that the Portfolio hold the underlying
security and which for puts requires the Portfolio to set aside cash, U.S.
government securities or other liquid, high-grade debt securities in an amount
not less than the exercise price or otherwise provide adequate cover at all
times while the put option is outstanding. At October 31, 1994, the Portfolio
had no written options.
The premium paid by the Portfolio for the purchase of a call or put option is
included in the Portfolio's "Statement of Assets and Liabilities" as an
investment and subsequently "marked-to-market" to reflect the current market
value of the option. If an option which the Portfolio has purchased expires on
the stipulated expiration date, the Portfolio realizes a loss in the amount of
the cost of the option. If the Portfolio enters into a closing sale transaction,
the Portfolio realizes a gain or loss, depending on whether proceeds from the
closing sale transaction are greater or less than the cost of the option. If the
Portfolio exercises a call option, the cost of the securities acquired by
exercising the call is increased by the premium paid to buy the call. If the
Portfolio exercises a put option, it realizes a gain or loss from the sale of
the underlying security, and the proceeds from such sale are decreased by the
premium originally paid. At October 31, 1994, the Portfolio had no outstanding
purchased options.
The risk associated with purchasing options is limited to the premium originally
paid. The risk in writing a call option is that the Portfolio may forego the
opportunity of profit if the market value of the underlying security or index
increases and the option is exercised. The risk in writing a put option is that
the Portfolio may incur a loss if the market value of the underlying security or
index decreases and the option is exercised. In addition, there is the risk the
Portfolio 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
Portfolio is required to pledge to the broker an amount of cash or securities
equal to the minimum "initial margin" requirements of the exchange on which the
contract is traded. Pursuant to the contract, the Portfolio agrees to receive
from or pay to the broker an amount of cash equal to the daily fluctuation in
value of the contract. Such receipts or payments are known as "variation margin"
and are recorded by the Portfolio as unrealized gains or losses. When the
contract is closed, the Portfolio records a realized gain or loss equal to the
difference between the value of the contract at the time it was opened and the
value at the time it was closed. The potential risk to the Portfolio is that the
change in value of the underlying securities may not correlate to the change in
value of the contracts. At October 31, 1994, the Portfolio did not hold futures
contracts.
Statement of Additional Information Page 109
<PAGE>
GLOBAL INFRASTRUCTURE PORTFOLIO
(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. 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 Portfolio may trade securities on other than normal
settlement terms. This may increase the risk if the other party to the
transaction fails to deliver and causes the Portfolio to subsequently invest at
less advantageous prices.
(H) PORTFOLIO SECURITIES LOANED
At October 31, 1994, stocks with an aggregate value of approximately $3,410,637
were on loan to brokers. The loans were secured by cash collateral of
$3,542,400. For international securities, cash collateral is received by the
Portfolio 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 Portfolio 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 the loan. For
the period ended October 31, 1994, the Portfolio received fees of $584 of income
from securities lending.
(I) TAXES
It is the policy of the Portfolio to meet the requirements of the Internal
Revenue Code of 1986, as amended ("Code"). Therefore, no provision has been made
for Federal taxes on income, capital gains, or unrealized appreciation of
securities held.
(J) DEFERRED ORGANIZATIONAL EXPENSES
Expenses incurred by the Portfolio 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 $25,000. These expenses
are being amortized on a straightline basis over a five-year period.
(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 Portfolio'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.
(L) INDEXED SECURITIES
The Portfolio may invest in indexed securities whose value is linked either
directly or indirectly to changes in foreign currencies, interest rates,
equities, indices, or other reference instruments. Indexed securities may be
more volatile than the reference instrument itself, but any loss is limited to
the amount of the original investment.
2. RELATED PARTIES
G.T. Capital is the Portfolio's investment manager and administrator. The
Portfolio pays investment management and administration fees to G.T. Capital at
the annualized rate of 0.725% on the first $500 million of average daily net
assets of the Portfolio; 0.70% on the next $500 million; 0.675% on the next $500
million; and 0.65% on amounts thereafter. These fees are computed daily and paid
monthly.
The Portfolio pays each of its Trustees who is not an employee, officer or
director of G.T. Capital, G.T. Global Financial Services, Inc. or G.T. Global
Investor Services, Inc. $500 per year plus $150 for each meeting of the board or
any committee thereof attended by the Trustees.
At October 31, 1994, all of the shares of beneficial interest of the Portfolio
were owned either by G.T. Global Infrastructure Fund or G.T. Capital.
3. PURCHASES AND SALES OF SECURITIES
For the period ended October 31, 1994, purchases and sales of investment
securities by the Portfolio, other than U.S. government obligations and
short-term investments, aggregated $50,619,297 and $3,671,323, respectively.
There were no purchases or sales of U.S. government obligations by the Portfolio
for the period ended October 31, 1994.
Statement of Additional Information Page 110
<PAGE>
G.T. GLOBAL NATURAL RESOURCES 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 Natural Resources Fund, one of the funds organized as a series of G.T.
Investment Funds, Inc., as of October 31, 1994 and the related statement of
operations, the statement of changes in net assets and the financial highlights
for the period from May 31, 1994 (commencement of operations) to October 31,
1994. 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
audit.
We conducted our audit 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. 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
audit provides 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 Natural Resources Fund as of October 31, 1994 and the results of its
operations, the changes in its net assets and the financial highlights for the
period from May 31, 1994 (commencement of operations) to October 31, 1994, in
conformity with generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
BOSTON, MASSACHUSETTS
DECEMBER 16, 1994
Statement of Additional Information Page 111
<PAGE>
G.T. GLOBAL NATURAL RESOURCES FUND
STATEMENT OF ASSETS
AND LIABILITIES
October 31, 1994
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Assets:
Investments in Global Natural Resources Portfolio (cost $26,271,048) (Note 1).........................
$26,949,639
Receivable for Fund shares sold.......................................................................
1,297,467
Receivable for expense reimbursement (Note 2).........................................................
88,584
Unamortized deferred organizational expenses (Note 1).................................................
47,154
-----------
Total assets..........................................................................................
28,382,844
-----------
Liabilities:
Payable for Fund shares repurchased...................................................................
117,510
Payable for registration fees.........................................................................
15,149
Payable for service and distribution expenses (Note 2)................................................
14,658
Payable for printing and postage expenses.............................................................
12,279
Payable for professional fees.........................................................................
11,870
Payable for Administration fees (Note 2)..............................................................
4,966
Payable for custodian fees............................................................................
3,562
Payable for Directors' fees (Note 2)..................................................................
1,014
Accrued expenses......................................................................................
1,427
-----------
Total liabilities.....................................................................................
182,435
-----------
Net assets..............................................................................................
$28,200,409
-----------
-----------
Class A:
Net asset value and redemption price per share
($14,796,806 DIVIDED BY 1,192,523 shares outstanding)..................................................
$ 12.41
-----------
-----------
Maximum offering price per share
(100/95.25 of $12.41)*.................................................................................
$ 13.03
-----------
-----------
Class B:+
Net asset value and offering price per share
($13,403,603 DIVIDED BY 1,082,698 shares outstanding)..................................................
$ 12.38
-----------
-----------
Net assets consist of:
Paid in capital (Note 3)..............................................................................
$27,550,552
Undistributed net investment income...................................................................
106,264
Accumulated net realized loss on investments and foreign currency conversions -- Global Natural
Resources Portfolio..................................................................................
(130,259)
Net unrealized appreciation of investments, dividends receivable, securities purchased and sold and
foreign currency conversions -- Global Natural Resources Portfolio...................................
673,852
-----------
Total -- representing net assets applicable to capital shares outstanding.............................
$28,200,409
-----------
-----------
<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 112
<PAGE>
G.T. GLOBAL NATURAL RESOURCES FUND
STATEMENT OF OPERATIONS
May 31, 1994 (commencement of operations) to October 31, 1994
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Investment income (Note 1):
Dividend income -- Global Natural Resources Portfolio................................................ $ 181,185
Interest income -- Global Natural Resources Portfolio................................................ 41,311
------------
Total investment income.............................................................................. 222,496
------------
Expenses:
Expenses -- Global Natural Resources Portfolio....................................................... 85,185
Service and distribution expenses (Note 2)
Class A.............................................................................. $ 11,282
Class B.............................................................................. 19,180 30,462
------------
Transfer agent fees (Note 2)......................................................................... 23,200
Printing and postage expenses........................................................................ 19,432
Professional fees.................................................................................... 14,052
Administration fees (Note 2)......................................................................... 10,436
Registration fees.................................................................................... 7,442
Directors' fees (Note 2)............................................................................. 5,090
Amortization of organizational expenses (Note 1)..................................................... 4,346
Custodian fees....................................................................................... 3,641
Other................................................................................................ 1,530
------------
Total expenses before expense reimbursement.......................................................... 204,816
Less expense reimbursement (Note 2).................................................................. (88,584)
------------
Total expenses....................................................................................... 116,232
------------
Net investment income.................................................................................. 106,264
------------
Net realized and unrealized gain (loss) on investments and foreign currencies (Note 1):
Net realized loss on investments -- Global Natural Resources Portfolio................. (180,800)
Net realized gain on foreign currency conversions -- Global Natural Resources
Portfolio............................................................................. 50,541
------------
Net realized loss.................................................................................... (130,259)
Increase in unrealized depreciation of dividends receivable, securities purchased and
sold, and foreign currency conversions -- Global Natural Resources Portfolio.......... (4,739)
Increase in unrealized appreciation of investments -- Global Natural Resources
Portfolio............................................................................. 678,591
------------
Net unrealized appreciation.......................................................................... 673,852
------------
Net realized and unrealized gain on investments and foreign currency conversions -- Global Natural
Resources Portfolio................................................................................... 543,593
------------
Net increase in net assets resulting from operations................................................... $ 649,857
------------
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 113
<PAGE>
G.T. GLOBAL NATURAL RESOURCES FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MAY 31, 1994
(COMMENCEMENT OF OPERATIONS)
TO OCTOBER 31, 1994
-----------------------------
<S> <C>
Increase in net assets
Operations:
Net investment income..............................................................................
$ 106,264
Net realized loss on investments and foreign currency conversions..................................
(130,259)
Increase in unrealized appreciation of investments, dividends receivable, securities purchased and
sold and foreign currency conversions.............................................................
673,852
------------
Net increase in net asssets resulting from operations..............................................
649,857
Capital Share Transactions (Note 3):
Increase from shares sold and reinvested...........................................................
34,666,146
Decrease from shares repurchased...................................................................
(7,215,594)
------------
Net increase from capital share transactions.......................................................
27,450,552
------------
Total increase in net assets.........................................................................
28,100,409
Net assets:
Beginning of period................................................................................
100,000
------------
End of period......................................................................................
$ 28,200,409*
------------
------------
<FN>
- ----------------
* Includes undistributed net investment income of $106,264.
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 114
<PAGE>
G.T. GLOBAL NATURAL RESOURCES FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout the period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
CLASS A CLASS B
MAY 31, 1994 MAY 31, 1994
(COMMENCEMENT OF OPERATIONS) (COMMENCEMENT OF OPERATIONS)
TO OCTOBER 31, 1994 TO OCTOBER 31, 1994
----------------------------- -----------------------------
<S> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period................................. $ 11.43 $ 11.43
-------- --------
Income from investment operations:
Net investment income.............................................. 0.06* 0.03*
Net realized and unrealized gain on investments.................... 0.92 0.92
-------- --------
Net increase from investment operations............................ 0.98 0.95
-------- --------
Net asset value, end of period....................................... $ 12.41 $ 12.38
-------- --------
-------- --------
Total investment return(c)........................................... 8.57%(b) 8.31%(b)
Ratios and supplemental data:
Net assets, end of period (in 000's)................................. $ 14,797 $ 13,404
Ratio of net investment income to average net assets................. 2.63%(a)* 2.13%(a)*
Ratio of net expenses to average net assets.......................... 2.40%(a)* 2.90%(a)*
<FN>
- ----------------
(a) Annualized.
(b) Not Annualized.
(c) Total investment return does not include sales charges.
* The annualized ratios of operating expenses and net investment income to
average net assets for Class A and Class B before expense reimbursement by
G.T. Capital Management, Inc. for the period ended October 31, 1994 would
have been 4.38% and 0.65%; and 4.88% and 0.15%, respectively. The net
investment income per share would have been reduced by $0.04 for each
class.
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 115
<PAGE>
G.T. GLOBAL NATURAL RESOURCES FUND
NOTES TO
FINANCIAL STATEMENTS
October 31, 1994
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
G.T. Global Natural Resources 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 Fund invests substantially all of
its investable assets in Global Natural Resources Portfolio ("Portfolio"), which
is registered as an open-end management investment company under the 1940 Act
and has investment objectives, policies and limitations substantially identical
to those of the Fund. The value of the Fund's investment in the Portfolio
reflects the Fund's proportionate interest in the net assets of the Portfolio.
The financial statements of the Portfolio, including the Portfolio of
Investments, are included elsewhere in this Report and should be read in
conjunction with the Fund's financial statements.
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) INVESTMENT VALUATION
Valuation of securities and other investment practices by the Portfolio are
discussed in Note 1 of the Portfolio's Notes to Financial Statements which are
included elsewhere in this Report.
(B) 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. The Fund currently has a capital loss carryforward of
$103,533 which expires in 2002.
(C) DISTRIBUTION 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 Portfolio and timing differences.
(D) 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 $51,500. These expenses
are being amortized on a straightline basis over a five-year period.
2. RELATED PARTIES
G.T. Capital Management, Inc. ("G.T. Capital") is the Fund's administrator. The
Fund pays administration fees to G.T. Capital at the annualized rate of 0.25% of
the Fund's average daily net assets. 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 items) 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 period ended October 31, 1994, G.T. Global retained
$14,471 of such sales charges. G.T. Global also makes ongoing shareholder
servicing and trail commission payments to dealers whose clients hold Class A
shares.
Statement of Additional Information Page 116
<PAGE>
G.T. GLOBAL NATURAL RESOURCES FUND
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 period ended October 31,
1994, G.T. Global collected CDSCs in the amount of $779. 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 plans of distribution 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 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.
Statement of Additional Information Page 117
<PAGE>
G.T. GLOBAL NATURAL RESOURCES FUND
3. 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
Emerging Markets 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
Strategic Income 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
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>
MAY 31, 1994
(COMMENCEMENT OF
OPERATIONS)
TO OCTOBER 31, 1994
----------------------
CLASS A SHARES AMOUNT
- --------------------------------------------------------------------------------------------------- --------- -----------
<S> <C> <C>
Shares sold........................................................................................ 1,647,315 $20,040,497
Shares repurchased................................................................................. (459,166) (5,648,929)
--------- -----------
Net increase....................................................................................... 1,188,149 $14,391,568
--------- -----------
--------- -----------
<CAPTION>
MAY 31, 1994
(COMMENCEMENT OF
OPERATIONS)
TO OCTOBER 31, 1994
----------------------
CLASS B SHARES AMOUNT
- --------------------------------------------------------------------------------------------------- --------- -----------
<S> <C> <C>
Shares sold........................................................................................ 1,205,189 $14,625,649
Shares repurchased................................................................................. (126,865) (1,566,665)
--------- -----------
Net increase....................................................................................... 1,078,324 $13,058,984
--------- -----------
--------- -----------
</TABLE>
Statement of Additional Information Page 118
<PAGE>
GLOBAL NATURAL RESOURCES PORTFOLIO
REPORT OF
INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
ANNUAL REPORT
To the Shareholders and Board of Trustees of
Global Natural Resources Portfolio:
We have audited the accompanying statement of assets and liabilities of Global
Natural Resources Portfolio, including the schedule of portfolio investments, as
of October 31, 1994 and the related statement of operations, statement of
changes in net assets and supplementary data for the period from May 31, 1994
(commencement of operations) to October 31, 1994. These financial statements and
the supplementary data are the responsibility of the Portfolio's management. Our
responsibility is to express an opinion on these financial statements and the
supplementary data based on our audit.
We conducted our audit 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 supplementary data 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 audit provides a reasonable basis for our opinion.
In our opinion, the financial statements and the supplementary data referred to
above present fairly, in all material respects, the financial position of Global
Natural Resources Portfolio as of October 31, 1994 and the results of its
operations, the changes in its net assets and the supplementary data for the
period from May 31, 1994 (commencement of operations) to October 31, 1994, in
conformity with generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
BOSTON, MASSACHUSETTS
DECEMBER 16, 1994
Statement of Additional Information Page 119
<PAGE>
GLOBAL NATURAL RESOURCES PORTFOLIO
PORTFOLIO OF INVESTMENTS
October 31, 1994
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market % of Net
Equity Investments Country Shares Value Assets(a)
<S> <C> <C> <C> <C>
- --------------------------------------------------------------------------
Metals - Non-Ferrous (22.4%)
- ----------------------------------------------
Eramet (c) FR 9,650 $704,954 2.6
Falconbridge Ltd. CAN 40,500 700,213 2.6
General Mining Union
Corporation (Gencor) S AFR 181,000 670,287 2.5
Pasminco Limited AUSL 376,100 631,537 2.3
Western Mining
Corporation Holdings
Limited AUSL 99,250 618,699 2.3
Rustenburg Platinum
Holdings Limited S AFR 18,700 540,948 2.0
Outokumpu OY "A" FIN 23,600 499,132 1.9
Savage Resources Ltd.
(c) AUSL 394,700 407,633 1.5
Hindalco Industries
Ltd. 144A GDR (b)(d) IND 11,000 385,000 1.4
Phelps Dodge
Corporation US 5,000 306,875 1.1
Bindura Nickel ZBBW 150,000 207,957 0.8
Compass Resources
N.L. (c) AUSL 175,000 162,531 0.6
Consolidated
Metallurgical Ind.
(c) S AFR 34,700 151,434 0.6
Impala Platinum
Holdings Ltd. ADR
(b) S AFR 3,000 66,375 0.2
-------------
6,053,575
-------------
Chemicals (15.5%)
- ----------------------------------------------
NOVA Corporation CAN 86,000 850,777 3.1
Dow Chemical Company US 10,000 735,000 2.6
Mississippi Chemical
Corporation (c) US 34,700 615,925 2.3
Methanex Corporation
(c) US 35,800 537,000 2.0
IMC Fertilizer Group,
Inc. US 10,500 446,250 1.7
Cominco Fertilizers
Ltd. CAN 20,000 445,636 1.7
Terra Industries,
Inc. US 30,000 318,750 1.2
PT Tri Polyta
Indonesia ADR (b)(c) INDO 8,000 238,000 0.9
-------------
4,187,338
-------------
<CAPTION>
Market % of Net
Equity Investments Country Shares Value Assets(a)
<S> <C> <C> <C> <C>
- --------------------------------------------------------------------------
Gold (14.1%)
- ----------------------------------------------
Golden Shamrock Mines
Ltd. (c) AUSL 525,000 $596,813 2.2
Acacia Resources Ltd.
(c) AUSL 400,000 594,398 2.2
Ashanti Goldfields
144A GDR (b)(c)(d) S AFR 27,000 577,800 2.1
Kloof Gold Mining S AFR 32,200 558,080 2.1
Perilya Mines N.L.
(c) AUSL 485,500 418,441 1.6
Randgold and
Exploration Company
Ltd. S AFR 95,000 296,135 1.1
Golden Star Resources
Ltd. (c) US 20,000 232,500 0.9
Free State Consoli-
dated Gold Mines S AFR 13,500 228,928 0.8
Randfontein Estates
Gold Mining S AFR 19,000 203,741 0.8
Southwestern Gold
Corporation (c) CAN 4,300 47,707 0.2
Mineral Resources
Inc. NZ 20,000 29,720 0.1
-------------
3,784,263
-------------
Forest Products (11.3%)
- ----------------------------------------------
St Laurent Paperboard
Inc. (c) CAN 100,700 1,284,815 4.8
Carter Holt Harvey
Limited NZ 261,000 633,448 2.4
Sappi Limited S AFR 32,000 534,663 2.0
Abitibi-Price, Inc.
(Installment
Receipt) (c) CAN 50,600 322,800 1.2
Aracruz Celulose S.A.
ADR (b)(c) BRZL 20,000 255,000 0.9
-------------
3,030,726
-------------
Metals - Steel (7.5%)
- ----------------------------------------------
Hylsamex S.A. de C.V.
144A ADR (b)(d) MEX 48,100 1,058,200 3.9
Caemi Mineracao E
Metal (Preferred)
(c) BRZL 2,700,000 428,671 1.6
Cospia S.A.
(Preferred "B") (c) BRZL 97,000 295,367 1.1
Schnitzer Steel
Industries, Inc.
Class A US 11,000 250,250 0.9
-------------
2,032,488
-------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 120
<PAGE>
GLOBAL NATURAL RESOURCES PORTFOLIO
<TABLE>
<CAPTION>
Market % of Net
Equity Investments Country Shares Value Assets(a)
- --------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Oil (6.0%)
- ----------------------------------------------
Atlantic Richfield,
Conv. Preferred,
9.01% till 9/15/97 US 14,200 $385,175 1.4
Elf Aquitaine ADR (b) FR 10,000 366,250 1.4
Cultus Petroleum N.L.
(c) AUSL 486,000 317,765 1.2
Norcen Energy
Resources, Inc. CAN 21,200 274,408 1.0
Penn West Petroleum
(c) CAN 45,000 262,112 1.0
-------------
1,605,710
-------------
Coal (4.5%)
- ----------------------------------------------
Randcoal Limited S AFR 98,000 684,289 2.5
Addington Resources,
Inc. (c) US 50,000 537,500 2.0
-------------
1,221,789
-------------
Misc. Materials & Commodities (4.4%)
- -------------------------------------------------------------
Auridiam Consolidated
N.L. AUSL 540,000 449,364 1.7
Reliance Industries
Ltd. 144A GDR (b)(d) IND 16,000 408,000 1.5
Granges, Inc. (c) CAN 78,000 165,577 0.6
<CAPTION>
Market % of Net
Equity Investments Country Shares Value Assets(a)
<S> <C> <C> <C> <C>
- --------------------------------------------------------------------------
Benguela Conces-
sions Limited (c) S AFR 130,000 $149,127 0.6
-------------
1,172,068
-------------
Energy Equipment & Services (1.7%)
- -------------------------------------------------------------
Mullen Trucking Ltd.
(c) CAN 42,400 270,488 1.0
Landmark Graphics
Corporation (c) US 9,500 194,750 0.7
-------------
465,238
- --------------------------------------------------------------------------
- --------------------------------------------------------------------------
Total Equity Investments
(cost $22,874,604)........................... 23,553,195 87.4
- --------------------------------------------------------------------------
- --------------------------------------------------------------------------
Short-Term Investment
- ----------------------------------
Repurchase Agreement (14.5%)
- ----------------------------------------------
Dated October 31, 1994 with State Street Bank
& Trust Company, due November 1, 1994, for an
effective yield of 4.7% collateralized by
$4,000,000 Federal National Mortgage
Association Note, 5.684% due 7/1/27. (Market
value $3,938,947, including accrued
interest.) (cost $3,919,512)................. 3,919,512 14.5
- --------------------------------------------------------------------------
- --------------------------------------------------------------------------
Total Investments (cost $26,794,116).......... 27,472,707 101.9
Liabilities Less Other Assets................. (522,968) (1.9 )
- --------------------------------------------------------------------------
- --------------------------------------------------------------------------
Net Assets.................................... $26,949,739 100.0
- --------------------------------------------------------------------------
- --------------------------------------------------------------------------
<FN>
- --------------------------------------------------------------------------------
(a) Percentages indicated are based on net assets of $26,949,739.
(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.
Abbreviations:
ADR -- American Depository Receipt
GDR -- Global Depository Receipt
* For Federal income tax purposes, cost is $26,811,795 and appreciation
(depreciation) of securities is as follows:
Unrealized appreciation: $1,321,912
Unrealized depreciation: (661,000)
----------
Net unrealized
appreciation: $ 660,912
----------
----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 121
<PAGE>
GLOBAL NATURAL RESOURCES PORTFOLIO
The Fund's Portfolio of Investments at October 31, 1994, was concentrated in the
following countries:
<TABLE>
<CAPTION>
Percentage of Net Assets (a)
--------------------------------------------------
Equity Short-Term Other Total
----------- ------------- ----------- ---------
<S> <C> <C> <C> <C>
Australia....................... 15.6 15.6
Brazil.......................... 3.6 3.6
Canada.......................... 17.2 17.2
Finland......................... 1.9 1.9
France.......................... 4.0 4.0
India........................... 2.9 2.9
Indonesia....................... 0.9 0.9
Mexico.......................... 3.9 3.9
New Zealand..................... 2.5 2.5
South Africa.................... 17.3 17.3
U.S............................. 16.8 14.5 (1.9) 29.4
Zimbabwe........................ 0.8 0.8
--- --- --- ---------
Total........................... 87.4 14.5 (1.9) 100.0
--- --- --- ---------
--- --- --- ---------
<FN>
- ----------------
(a) Percentages indicated are based on net assets of $26,949,739.
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 122
<PAGE>
GLOBAL NATURAL RESOURCES PORTFOLIO
STATEMENT OF ASSETS
AND LIABILITIES
October 31, 1994
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Assets:
Investments in securities, at value (cost $22,874,604) (Note 1)....................................... $23,553,195
Repurchase agreements (cost $3,919,512) (Note 1)...................................................... 3,919,512
U.S. currency..............................................................................
$ 805
Foreign currency (cost $843,363)...........................................................
833,715 834,520
---------
Receivable for securities sold........................................................................ 3,000,631
Dividends receivable.................................................................................. 167,967
Unamortized deferred organizational expenses (Note 1)................................................. 22,890
Cash held as collateral for securities loaned (Note 1)................................................ 316,200
-----------
Total assets.......................................................................................... 31,814,915
-----------
Liabilities:
Payable for securities purchased...................................................................... 4,480,749
Payable for deferred organizational expenses.......................................................... 25,000
Payable for investment management and administration fees (Note 2).................................... 18,057
Payable for professional fees......................................................................... 12,028
Payable for printing and postage expenses............................................................. 6,505
Payable for Trustees' fees (Note 2)................................................................... 2,141
Payable for custodian fees............................................................................ 1,824
Accrued expenses...................................................................................... 2,672
Collateral for securities loaned (Note 1)............................................................. 316,200
-----------
Total liabilities..................................................................................... 4,865,176
-----------
Net assets.............................................................................................. $26,949,739
-----------
-----------
Net assets consist of:
Paid in capital....................................................................................... $26,268,835
Undistributed net investment income................................................................... 137,311
Accumulated net realized loss on investments and foreign currency conversions......................... (130,259)
Net unrealized appreciation of investments, dividends receivable, securities purchased and sold and
foreign currency converions.......................................................................... 673,852
-----------
Total -- representing net assets applicable to shares of beneficial interest outstanding.............. $26,949,739
-----------
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 123
<PAGE>
GLOBAL NATURAL RESOURCES PORTFOLIO
STATEMENT OF OPERATIONS
May 31, 1994 (commencement of operations) to October 31, 1994
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Investment income (Note 1):
Dividends (net of foreign withholding tax of $1,604).................................................... $ 181,185
Interest................................................................................................ 41,311
---------
Total investment income................................................................................. 222,496
---------
Expenses:
Investment management and administration fees (Note 2).................................................. 28,500
Custodian fees.......................................................................................... 14,717
Professional fees....................................................................................... 27,770
Trustees' fees (Note 2)................................................................................. 2,908
Printing and postage expenses........................................................................... 7,650
Amortization of organizational expenses (Note 1)........................................................ 2,110
Other................................................................................................... 1,530
---------
Total expenses.......................................................................................... 85,185
---------
Net investment income..................................................................................... 137,311
---------
Net realized and unrealized gain (loss) on investments and foreign currencies (Note 1):
Net realized loss on investments............................................................. $(180,800)
Net realized gain on foreign currency conversions............................................ 50,541
---------
Net realized loss....................................................................................... (130,259)
Increase in unrealized depreciation of dividends receivable, securities purchased and sold,
and foreign currency conversions............................................................ (4,739)
Increase in unrealized appreciation of investments........................................... 678,591
---------
Net unrealized appreciation............................................................................. 673,852
---------
Net realized and unrealized gain on investments and foreign currency conversions.......................... 543,593
---------
Net increase in net assets resulting from operations...................................................... $ 680,904
---------
---------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 124
<PAGE>
GLOBAL NATURAL RESOURCES PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MAY 31, 1994
(COMMENCEMENT OF OPERATIONS)
TO OCTOBER 31, 1994
-----------------------------
<S> <C>
Increase in net assets
Operations:
Net investment income..............................................................................
$ 137,311
Net realized loss on investments and foreign currency conversions..................................
(130,259)
Increase in unrealized appreciation of investments, dividends receivable, securities purchased and
sold and foreign currency conversions.............................................................
673,852
------------
Net increase in net asssets resulting from operations..............................................
680,904
Beneficial interest transactions:
Contributions......................................................................................
33,302,836
Withdrawals........................................................................................
(7,134,101)
------------
Net increase from beneficial interest transactions.................................................
26,168,735
------------
Total increase in net assets.........................................................................
26,849,639
Net assets:
Beginning of period................................................................................
100,100
------------
End of period......................................................................................
$ 26,949,739*
------------
------------
<FN>
- ----------------
* Includes undistributed net investment income of $137,311.
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 125
<PAGE>
GLOBAL NATURAL RESOURCES PORTFOLIO
SUPPLEMENTARY DATA
- --------------------------------------------------------------------------------
Contained below are ratios and supplemental data that have been derived from
information provided in the financial statements.
<TABLE>
<CAPTION>
MAY 31, 1994
(COMMENCEMENT OF OPERATIONS)
TO OCTOBER 31, 1994
----------------------------
<S> <C>
Ratios and supplemental data:
Net assets, end of period (in 000's)........................ $26,950
Ratio of net investment income to average net assets........ 3.47%(a)
Ratio of operating expenses to average net assets........... 2.15%(a)
Portfolio turnover rate..................................... 137%
<FN>
- ----------------
(a) Annualized.
</TABLE>
Statement of Additional Information Page 126
<PAGE>
GLOBAL NATURAL RESOURCES PORTFOLIO
NOTES TO
FINANCIAL STATEMENTS
October 31, 1994
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
Global Natural Resources Portfolio ("Portfolio") is organized as a New York
Trust and is registered under the Investment Company Act of 1940, as amended
("1940 Act"), as a non-diversified, open-end management investment company. The
following is a summary of significant accounting policies consistently followed
by the Portfolio in the preparation of the financial statements. The policies
are in conformity with generally accepted accounting principles.
(A) PORTFOLIO VALUATION
The Portfolio calculates the net asset value of and completes orders to
purchase, exchange or repurchase Portfolio shares of beneficial interest 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 services 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 fluctuations, 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
Portfolio's Board of Trustees.
Portfolio securities which are primarily traded on foreign exchanges are
generally valued at the preceding closing values of such securities on their
respective exchanges, and those values are then translated into U.S. dollars at
the current exchange 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 Portfolio's Board of Trustees.
(B) FOREIGN CURRENCY TRANSLATION
The accounting records of the Portfolio 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 Portfolio 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.
In addition, the Fund may focus its investments in certain related natural
resources industries, subjecting the Fund to greater risk than a fund that is
more diversified.
Statement of Additional Information Page 127
<PAGE>
GLOBAL NATURAL RESOURCES PORTFOLIO
(C) REPURCHASE AGREEMENTS
With respect to repurchase agreements entered into by the Portfolio, it is the
Portfolio's policy to always receive, as collateral, United States government
securities or other high quality debt securities of which the value, including
accrued interest, is at least equal to the amount to be paid to the Portfolio
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 Portfolio as an unrealized gain or loss. When the Forward is closed, the
Portfolio 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
Portfolio 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
Portfolio 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 Portfolio writes a call or put option, an amount equal to the premium
received is included in the Portfolio's "Statement of Assets and Liabilities" as
an asset and an equivalent liability. The amount of the liability is
subsequently marked-to-market to reflect the current market value of the option.
The current market value of an option listed on a traded exchange is valued at
its last 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 Portfolio enters into a closing purchase
transaction, a gain or loss is realized without regard to any unrealized gain or
loss on the underlying security, and the liability related to such option is
extinguished. If a written call option is exercised, a gain or loss is realized
from the sale of the underlying security and the proceeds of the sale are
increased by the premium originally received. If a written put option is
exercised, the cost of the underlying security purchased would be decreased by
the premium originally received. The Portfolio can write options only on a
covered basis, which for a call requires that the Portfolio holds the underlying
security and for a put requires the Portfolio to set aside cash, U.S. government
securities or other liquid, high-grade debt securities in an amount not less
than the exercise price or otherwise provide adequate cover at all times while
the put option is outstanding. At October 31, 1994, the Portfolio had no written
options.
The premium paid by the Portfolio for the purchase of a call or put option is
included in the Portfolio's "Statement of Assets and Liabilities" as an
investment and subsequently "marked-to-market" to reflect the current market
value of the option. If an option which the Portfolio has purchased expires on
the stipulated expiration date, the Portfolio realizes a loss in the amount of
the cost of the option. If the Portfolio enters into a closing sale transaction,
the Portfolio realizes a gain or loss, depending on whether proceeds from the
closing sale transaction are greater or less than the cost of the option. If the
Portfolio exercises a call option, the cost of the securities acquired by
exercising the call is increased by the premium paid to buy the call. If the
Portfolio exercises a put option, it realizes a gain or loss from the sale of
the underlying security, and the proceeds from such sale are decreased by the
premium originally paid. At October 31, 1994, the Portfolio had no outstanding
purchased options.
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
Portfolio is required to pledge to the broker an amount of cash or securities
equal to the minimum "initial margin" requirements of the exchange on which the
contract is traded. Pursuant to the contract, the Portfolio agrees to receive
from or pay to the broker an amount of cash equal to the daily fluctuation in
value of the contract. Such receipts or payments are known as "variation margin"
and are recorded by the Portfolio as unrealized gains or losses. When the
contract is closed, the Portfolio records a realized gain or loss equal to the
difference between the value of the contract at the time it was opened and the
value at the time it was closed. The potential risk to the Portfolio is that the
change in value of the underlying securities may not correlate to the change in
value of the contracts. At October 31, 1994, the Portfolio did not hold futures
contracts.
Statement of Additional Information Page 128
<PAGE>
GLOBAL NATURAL RESOURCES PORTFOLIO
(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. 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 Portfolio may trade securities on other than normal
settlement terms. This may increase the risk if the other party to the
transaction fails to deliver and causes the Portfolio to subsequently invest at
less advantageous prices.
(H) PORTFOLIO SECURITIES LOANED
At October 31, 1994, stocks with an aggregate value of approximately $294,040
were on loan to brokers. The loans were secured by cash collateral of $316,200.
For international securities, cash collateral is received by the Portfolio
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 Portfolio 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 the loan. For
the period ended October 31, 1994, the Portfolio received $40 of income from
securities lending which was used to offset the Portfolio's custody expenses.
(I) TAXES
It is the policy of the Portfolio to meet the requirements of the Internal
Revenue Code of 1986, as amended ("Code"). Therefore, no provision has been made
for Federal taxes on income, capital gains, or unrealized appreciation of
securities held.
(J) DEFERRED ORGANIZATIONAL EXPENSES
Expenses incurred by the Portfolio 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 $25,000. These expenses
are being amortized on a straightline basis over a five-year period.
(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 Portfolio'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.
(L) INDEXED SECURITIES
The Portfolio may invest in indexed securities whose value is linked either
directly or indirectly to changes in foreign currencies, interest rates,
equities, indices, or other reference instruments. Indexed securities may be
more volatile than the reference instrument itself, but any loss is limited to
the amount of the original investment.
2. RELATED PARTIES
G.T. Capital is the Portfolio's investment manager and administrator. The
Portfolio pays investment management and administration fees to G.T. Capital at
the annualized rate of 0.725% on the first $500 million of average daily net
assets of the Portfolio; 0.70% on the next $500 million; 0.675% on the next $500
million; and 0.65% on amounts thereafter. These fees are computed daily and paid
monthly.
The Portfolio pays each of its Trustees who is not an employee, officer or
director of G.T. Capital, G.T. Global Financial Services, Inc. or G.T. Global
Investor Services, Inc. $500 per year plus $150 for each meeting of the board or
any committee thereof attended by the Trustees.
At October 31, 1994, all of the shares of beneficial interest of the Portfolio
were owned either by G.T. Global Natural Resources Fund or G.T. Capital.
3. PURCHASES AND SALES OF SECURITIES
For the period ended October 31, 1994, purchases and sales of investment
securities by the Portfolio, other than U.S. government obligations and
short-term investments, aggregated $37,150,485 and $14,165,894, respectively.
There were no purchases or sales of U.S. government obligations by the Portfolio
for the period ended October 31, 1994.
Statement of Additional Information Page 129
<PAGE>
G.T. GLOBAL HEALTH CARE 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 Health Care Fund, one of the funds organized as a series of G.T.
Investment Funds, Inc., including the portfolio of 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 five years in the period then
ended. These financial statements and the financial highlights are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and the financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and the financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
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 Health Care 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 five years in the period then ended, in conformity with generally accepted
accounting principles.
COOPERS & LYBRAND L.L.P.
BOSTON, MASSACHUSETTS
DECEMBER 16, 1994
Statement of Additional Information Page 130
<PAGE>
G.T. GLOBAL HEALTH CARE FUND
PORTFOLIO OF INVESTMENTS
October 31, 1994
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market % of Net
Equity Investments Country Shares Value Assets(a)
<S> <C> <C> <C> <C>
- ---------------------------------------------------------------------------
Health Care Services (37.9%)
- ---------------------------------------------
United Healthcare
Corporation US 540,000 $28,485,000 6.0
Columbia/HCA
Healthcare
Corporation US 435,000 18,106,875 3.8
Pacificare Health
Systems Inc. Class B
(c) US 180,000 13,140,000 2.7
Humana, Inc. US 400,000 9,750,000 2.0
U.S. Healthcare, Inc. US 200,000 9,450,000 2.0
Integrated Health
Services, Inc. US 200,000 8,150,000 1.7
Health Care &
Retirement
Corporation (c) US 300,000 8,062,500 1.7
Health Management
Associates, Inc.
Class A (c) US 300,000 7,800,000 1.7
Value Health, Inc.
(c) US 200,000 7,750,000 1.7
Pacificare Health
Systems Inc. Class A
(c) US 81,000 6,034,500 1.3
Amersham
International PLC UK 350,000 5,621,524 1.2
Physician Corporation
of America (c) US 225,000 5,428,125 1.1
Wellpoint Health
Network, Inc. Class
A (c) US 180,000 4,950,000 1.0
HBO & Company US 150,000 4,875,000 1.0
Pyxis Corporation (c) US 235,000 4,523,575 0.9
Vencor, Inc. (c) US 150,000 4,481,250 0.9
Sierra Health
Services, Inc. (c) US 130,000 4,225,000 0.9
Health Systems
International, Inc.
Class A (c) US 150,000 4,031,250 0.8
Coventry Corporation
(c) US 151,100 3,777,500 0.8
National Medical
Enterprises US 250,000 3,625,000 0.8
Grupo Casa Autrey
S.A. de C.V.
Sponsored ADR (b) MEX 100,000 3,050,000 0.6
<CAPTION>
Market % of Net
Equity Investments Country Shares Value Assets(a)
<S> <C> <C> <C> <C>
- ---------------------------------------------------------------------------
Living Centers of
America, Inc. (c) US 100,000 $3,012,500 0.6
SRL Inc. JPN 129,000 2,877,323 0.6
Hillhaven Corporation
(c) US 100,000 2,227,319 0.5
Multicare Companies,
Inc. (c) US 100,000 2,062,500 0.4
Healthsource, Inc.
(c) US 50,000 1,937,500 0.4
Regency Health
Services, Inc. (c) US 137,900 1,568,613 0.3
Inphynet Medical
Management, Inc. (c) US 130,000 1,527,500 0.3
Quorum Health Group,
Inc. (c) US 50,000 1,137,500 0.2
--------------
181,667,854
--------------
Pharmaceuticals (31.7%)
- ---------------------------------------------
Pfizer, Inc. US 225,000 16,678,125 3.5
Bayer AG GER 45,000 10,533,826 2.2
Astra AB-B Free SWDN 390,000 10,421,132 2.2
Eli Lilly & Company US 150,000 9,300,000 2.0
Astra AB-A Free SWDN 284,330 7,696,466 1.6
Warner-Lambert Co. US 100,000 7,625,000 1.6
Rhone-Poulenc "A" FR 300,000 7,402,370 1.5
Elan Corporation, PLC
ADR (b)(c) IRL 200,000 7,375,000 1.5
Santen Pharmaceutical JPN 266,000 7,059,273 1.5
Schering AG GER 10,000 6,681,966 1.4
Sankyo Co. Ltd. JPN 200,000 5,204,461 1.1
Ethical Holdings PLC
Sponsored ADR (b)(c) UK 730,000 5,201,250 1.1
Ares-Serono Group
Class B SWTZ 9,220 4,999,680 1.0
Takeda Chemical
Industries JPN 400,000 4,956,629 1.0
Mylan Laboratories US 175,000 4,900,600 1.0
American Home
Products US 75,000 4,769,000 1.0
Forest Laboratories
Inc. Class A (c) US 100,000 4,600,000 1.0
Roche Holdings AG
Genusscheine SWTZ 1,000 4,453,748 0.9
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 131
<PAGE>
G.T. GLOBAL HEALTH CARE FUND
<TABLE>
<CAPTION>
Market % of Net
Equity Investments Country Shares Value Assets(a)
- ---------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Teva Pharmaceuticals
Ind. ADR (b) ISRL 150,000 $4,087,500 0.9
Yamanouchi
Pharmaceutical JPN 200,000 3,944,651 0.8
Rhone-Poulenc S.A.
ADR (b) FR 125,000 3,062,500 0.6
Allergan, Inc. US 100,000 2,637,500 0.6
Matrix
Pharmaceutical, Inc.
(c) US 163,000 2,344,245 0.5
Roberts
Pharmaceutical
Corporation (c) US 85,000 2,295,000 0.5
Elan Corporation, PLC
ADR Units (b)(c) IRL 63,715 1,847,735 0.4
Roussel Uclaf FR 7,100 793,180 0.2
Therapeutic Discovery
Corporation (Units)
(c) US 100,000 562,500 0.1
--------------
151,433,337
--------------
Medical Technology & Supplies (10.8%)
- -------------------------------------------------------------
Medtronic, Inc. US 255,000 13,293,375 2.8
Sulzer AG
(Registered) SWTZ 12,000 8,478,469 1.8
Nellcor, Inc. (c) US 200,000 6,200,000 1.3
Ventritex, Inc. (c) US 200,000 5,200,000 1.1
Target Therapeutics,
Inc. (c) US 100,000 3,175,253 0.7
Sofamor Danek Group,
Inc. (c) US 175,000 2,931,079 0.6
Fresenius AG
(Preferred) GER 6,975 2,923,069 0.6
Haemonetics
Corporation (c) US 100,000 2,000,000 0.4
Cellpro, Inc. (c) US 100,000 1,675,000 0.4
Technol Medical
Products, Inc. (c) US 100,000 1,600,000 0.3
Molecular Dynamics,
Inc. (c) US 190,000 1,448,750 0.3
Cardiovascular
Imaging Systems (c) US 100,000 925,000 0.2
Orthologic
Corporation (c) US 165,000 639,375 0.1
Anesta Corporation
(c) US 100,000 637,500 0.1
Resound Corporation
(c) US 50,000 500,000 0.1
--------------
51,626,870
--------------
<CAPTION>
Market % of Net
Equity Investments Country Shares Value Assets(a)
<S> <C> <C> <C> <C>
- ---------------------------------------------------------------------------
Biotechnology (10.8%)
- ---------------------------------------------
Amgen, Inc. (c) US 225,000 $12,543,750 2.6
Chiron Corporation
(c) US 175,000 11,790,625 2.5
Genentech, Inc. (c) US 125,000 6,343,750 1.3
Protein Design
Laboratories, Inc.
(c) US 300,000 5,175,000 1.1
Genetics Institute,
Inc. (c) US 83,000 3,361,500 0.7
Genzyme Corporation
(c) US 100,000 3,275,000 0.7
Cor Therapeutics,
Inc. (c) US 200,000 2,600,000 0.5
Biogen, Inc. (c) US 50,000 2,450,000 0.5
Somatix Therapy
Corporation (c) US 250,000 1,250,000 0.3
Alpha-Beta
Technology, Inc. (c) US 100,000 925,000 0.2
Gilead Sciences Inc. US 93,000 790,500 0.2
SciClone
Pharmaceuticals,
Inc. US 90,000 551,250 0.1
Ribi Immunochem
Research, Inc. US 100,000 462,500 0.1
Enzon, Inc.
(Preferred) US 16,000 90,000 --
--------------
51,608,875
- ---------------------------------------------------------------------------
- ---------------------------------------------------------------------------
Total Equity Investments (cost
$340,425,293)............................... 436,336,936 91.2
- ---------------------------------------------------------------------------
- ---------------------------------------------------------------------------
Warrants
- ---------------------------------------------
Pharmaceuticals (0.1%)
- ---------------------------------------------
Roche Holdings AG Wts
expire 12/5/94 (cost
$0) SWTZ 3,500 387,959 0.1
- ---------------------------------------------------------------------------
- ---------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 132
<PAGE>
G.T. GLOBAL HEALTH CARE FUND
<TABLE>
<CAPTION>
Market % of Net
Short-Term Investment Value Assets(a)
- ---------------------------------------------------------------------------
<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
$35,115,000 U.S. Treasury Bond, 8.125% due
8/15/19. (Market value $36,333,171 including
accrued interest.)
(cost $35,732,664)..........................
$35,732,664 7.5
- ---------------------------------------------------------------------------
- ---------------------------------------------------------------------------
Total Investments
(cost $376,157,957)*........................ 472,457,559 98.8
Other Assets Less Liabilities................ 5,582,734 1.2
- ---------------------------------------------------------------------------
Net Assets................................... $478,040,293 100.0
- ---------------------------------------------------------------------------
- ---------------------------------------------------------------------------
<FN>
- --------------------------------------------------------------------------------
(a) Percentages indicated are based on net assets of $478,040,293.
(b) U.S. currency denominated.
(c) Non-income producing security.
Abbreviation:
ADR -- American Depository Receipt
* For Federal income tax purposes, cost is $376,883,864 and appreciation
(depreciation) of securities is as follows:
Unrealized appreciation: $ 108,987,337
Unrealized depreciation: (13,413,642)
-------------
Net unrealized appreciation: $ 95,573,695
-------------
-------------
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
FORWARD FOREIGN CURRENCY CONTRACT OUTSTANDING
OCTOBER 31, 1994
<TABLE>
<CAPTION>
Contract Delivery Unrealized
Contract to Sell Market Value Price Date (Depreciation)
- ------------------------------------------------------------------------------- ------------ --------- --------- -------------
<S> <C> <C> <C> <C>
Japanese Yen (Receivable amount $7,881,269).................................... $8,008,104 97.7000 01/18/95 ($ 126,835)
------------ -------------
------------ -------------
The value of Contract to Sell as a percentage of Net Assets is 1.7%.
<FN>
- ----------------
See Note 1 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)
-------------------------------------------------------------------
Country Equity Warrants Short-Term Other Total
- ---------------------------- ----------- ------------- --------------- ----------- ---------
<S> <C> <C> <C> <C> <C>
France...................... 2.3 2.3
Germany..................... 4.2 4.2
Ireland..................... 1.9 1.9
Israel...................... 0.9 0.9
Japan....................... 5.0 5.0
Mexico...................... 0.6 0.6
Sweden...................... 3.8 3.8
Switzerland................. 3.7 0.1 3.8
UK.......................... 2.3 2.3
U.S......................... 66.5 7.5 1.2 75.2
-- --
--- --- ---------
Total....................... 91.2 0.1 7.5 1.2 100.0
-- --
-- --
--- --- ---------
--- --- ---------
<FN>
- ----------------
(a) Percentages indicated are based on net assets of $478,040,293.
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 133
<PAGE>
G.T. GLOBAL HEALTH CARE FUND
STATEMENT OF ASSETS
AND LIABILITIES
October 31, 1994
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Assets:
<S> <C> <C>
Investments in securities, at value (cost $376,157,957) (Note 1).................................... $ 472,457,559
U.S. currency..........................................................................
$ 598
Foreign currency (cost $9,611).........................................................
10,087 10,685
-----------
Receivable for securities sold...................................................................... 12,940,698
Receivable for Fund shares sold..................................................................... 8,446,437
Dividends and dividend tax reclaims receivable...................................................... 506,144
Cash held as collateral for securities loaned (Note 1).............................................. 73,360,463
-------------
Total assets........................................................................................ 567,721,986
-------------
Liabilities:
Payable for securities purchased.................................................................... 12,601,383
Payable for Fund shares repurchased................................................................. 2,543,018
Payable for investment management and administration fees (Note 2).................................. 379,381
Payable for service and distribution expenses (Note 2).............................................. 211,960
Payable for transfer agent fees (Note 2)............................................................ 185,060
Payable for open forward foreign currency contracts, net (Note 1)................................... 126,835
Payable for printing and postage expenses........................................................... 102,308
Payable for registration fees....................................................................... 55,298
Payable for custodian fees (Note 1)................................................................. 43,820
Payable for professional fees....................................................................... 40,869
Payable for Directors' fees (Note 2)................................................................ 5,992
Accrued expenses.................................................................................... 25,306
Collateral for securities loaned (Note 1)........................................................... 73,360,463
-------------
Total liabilities................................................................................... 89,681,693
-------------
Net assets............................................................................................ $ 478,040,293
-------------
-------------
Class A:
Net asset value and redemption price per share
($438,939,891 DIVIDED BY 22,399,890 shares outstanding)............................................. $ 19.60
-------------
-------------
Maximum offering price per share
(100/95.25 of $19.60)*............................................................................... $ 20.58
-------------
-------------
Class B:+
Net asset value and offering price per share
($39,100,402 DIVIDED BY 2,009,174 shares outstanding)............................................... $ 19.46
-------------
-------------
Net assets consist of:
Paid in capital (Note 4)............................................................................ $ 373,443,591
Accumulated net realized gain on investments, options, foreign currency conversions and forward
foreign currency contracts......................................................................... 8,399,184
Net unrealized appreciation of investments, dividends and dividend withholding tax reclaims
receivable,
securities purchased and sold, foreign currency conversions and forward foreign currency 96,197,518
contracts..........................................................................................
-------------
Total -- representing net assets applicable to capital shares outstanding........................... $ 478,040,293
-------------
-------------
<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 134
<PAGE>
G.T. GLOBAL HEALTH CARE 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 $198,736)............................................. $ 2,254,873
Interest.............................................................................................. 1,051,142
-----------
Total investment income............................................................................... 3,306,015
-----------
Expenses:
Investment management and administration fees (Note 2)................................................ 4,353,688
Service and distribution expenses: (Note 2)
Class A................................................................................ $ 2,102,985
Class B................................................................................ 259,350 2,362,335
-----------
Transfer agent fees (Note 2).......................................................................... 1,630,985
Printing and postage expenses......................................................................... 227,783
Custodian fees (Note 1)............................................................................... 193,956
Registration fees..................................................................................... 82,195
Professional fees..................................................................................... 76,415
Amortization of organizational expenses (Note 1)...................................................... 10,194
Directors' fees (Note 2).............................................................................. 5,520
Other................................................................................................. 11,135
-----------
Total net expenses.................................................................................... 8,954,206
-----------
Net investment loss..................................................................................... (5,648,191)
-----------
Net realized and unrealized gain on investments and foreign currencies (Note 1):
Net realized gain on investments and options............................................. 59,524,645
Net realized loss on foreign currency conversions and forward foreign currency
contracts............................................................................... (1,566,518)
-----------
Net realized gain..................................................................................... 57,958,127
Change in unrealized depreciation of dividends and dividend withholding tax reclaims
receivable, securities purchased and sold, foreign currency conversions and forward
foreign currency contracts.............................................................. (2,695,118)
Change in unrealized depreciation of investments......................................... (4,582,027)
-----------
Net unrealized depreciation........................................................................... (7,277,145)
-----------
Net realized and unrealized gain on investments, options and foreign currencies......................... 50,680,982
-----------
Net increase in net assets resulting from operations.................................................... $45,032,791
-----------
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 135
<PAGE>
G.T. GLOBAL HEALTH CARE 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 loss.......................................................................... $ (5,648,191) $ (4,772,367)
Net realized gain (loss) on investments, options, foreign currency conversions and forward
foreign currency contracts.................................................................. 57,958,127 (2,036,715)
Change in unrealized appreciation (depreciation) of investments, dividends and dividend
withholding tax reclaims receivable, securities purchased and sold, foreign currency
conversions and forward foreign currency contracts.......................................... (7,277,145) 10,173,946
---------------- ----------------
Net increase in net assets resulting from operations......................................... 45,032,791 3,364,864
Class A:+
Distributions to shareholders from: (Note 1)
In excess of net realized gain on investments................................................ (1,492,549) 0
Class B:++
Distributions to shareholders from: (Note 1)
In excess of net realized gain on investments................................................ (28,033) 0
Capital share transactions (Note 4):
Increase from capital shares sold and reinvested............................................. 785,204,559 606,277,692
Decrease from capital shares repurchased..................................................... (820,493,437) (795,692,625)
---------------- ----------------
Net decrease from capital share transactions................................................. (35,288,878) (189,414,933)
---------------- ----------------
Total increase (decreased) in net assets....................................................... 8,223,331 (186,050,069)
Net assets:
Beginning of year............................................................................ 469,816,962 655,867,031
---------------- ----------------
End of year.................................................................................. $ 478,040,293* $ 469,816,962**
---------------- ----------------
---------------- ----------------
<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.
* Includes undistributed net investment income of $0.
** Includes undistributed net investment loss of $(11,063,638).
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 136
<PAGE>
G.T. GLOBAL HEALTH CARE 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+
------------------------------------------------
<S> <C> <C> <C> <C> <C>
YEAR ENDED OCTOBER 31,
------------------------------------------------
1994* 1993* 1992 1991 1990
-------- -------- -------- -------- --------
Per Share Operating Performance:
Net asset value, beginning of
period........................................... $ 17.86 $ 17.44 $ 19.29 $ 12.83 $ 11.83
-------- -------- -------- -------- --------
Income from investment operations:
Net investment income (loss).................... (0.22) (0.15) (0.18) 0.03 0.06
Net realized and unrealized gain (loss) on
investments.................................... 2.02 0.57 (1.53) 6.78 0.97
-------- -------- -------- -------- --------
Net increase (decrease) from investment
operations..................................... 1.80 0.42 (1.71) 6.81 1.03
-------- -------- -------- -------- --------
Distributions:
Net investment income........................... (0.00) (0.00) (0.00) (0.07) (0.03)
Net realized gain on investments................ (0.00) (0.00) (0.14) (0.28) (0.00)
In excess of net realized gain on investments... (0.06) (0.00) (0.00) (0.00) (0.00)
-------- -------- -------- -------- --------
Total distributions........................... (0.06) (0.00) (0.14) (0.35) (0.03)
-------- -------- -------- -------- --------
Net asset value, end of period.................... $ 19.60 $ 17.86 $ 17.44 $ 19.29 $ 12.83
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
Total investment return (c)....................... 10.11% 2.4% (8.9)% 54.2% 8.7%
Ratios and supplemental data:
Net assets, end of year (in 000's)................ $438,940 $461,113 $655,867 $552,897 $145,544
Ratio of net investment income (loss) to average
net assets....................................... (1.23)% (0.9)% (1.0)% 0.2% 0.7%
Ratio of expenses to average net assets........... 1.98% 2.0% 2.1% 2.0% 2.4%
Portfolio turnover rate +++....................... 64% 61% 30% 23% 34%
<CAPTION>
CLASS B++
-----------------------------------
<S> <C> <C>
APRIL 1, 1993+
YEAR ENDED TO OCTOBER 30,
OCTOBER 31, 1994* 1993*
----------------- ---------------
Per Share Operating Performance:
Net asset value, beginning of
period........................................... $ 17.80 $15.59
-------- -------
Income from investment operations:
Net investment income (loss).................... (0.32) (0.14)
Net realized and unrealized gain (loss) on
investments.................................... 2.02 2.35
-------- -------
Net increase (decrease) from investment
operations..................................... 1.70 2.21
-------- -------
Distributions:
Net investment income........................... (0.00) (0.00)
Net realized gain on investments................ (0.00) (0.00)
In excess of net realized gain on investments... (0.04) (0.00)
-------- -------
Total distributions........................... (0.04) (0.00)
-------- -------
Net asset value, end of period.................... $ 19.46 $17.80
-------- -------
-------- -------
Total investment return (c)....................... 9.55% 14.2%(a)
Ratios and supplemental data:
Net assets, end of year (in 000's)................ $39,100 $8,604
Ratio of net investment income (loss) to average
net assets....................................... (1.73)% (1.4)%(b)
Ratio of expenses to average net assets........... 2.48% 2.5%(b)
Portfolio turnover rate +++....................... 64% 61%
<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.
* These selected per share data were calculated based upon weighted average
shares outstanding during the period.
(a) Not annualized.
(b) Annualized.
(c) Total investment return does not include sales charges.
</TABLE>
Statement of Additional Information Page 137
<PAGE>
G.T. GLOBAL HEALTH CARE FUND
NOTES TO
FINANCIAL STATEMENTS
October 31, 1994
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
G.T. Global Health Care 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 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 of the Fund are maintained in U.S. dollars. The market
values of foreign securities, currency holdings, other assets and liabilities
are recorded in the books and records of the Fund after translation to U.S.
dollars based on the exchange rates 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.
In addition, the Fund may focus its investments in certain related health care
industries, subjecting the Fund to greater risk than a fund that is more
diversified.
Statement of Additional Information Page 138
<PAGE>
G.T. GLOBAL HEALTH CARE FUND
(C) REPURCHASE AGREEMENTS
With respect to repurchase agreements entered into by the Fund, it is the Fund's
policy to always receive, as collateral, United States government securities or
other high quality debt securities of which the value,
including accrued interest, is at least equal to the amount to be 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 set aside cash, U.S. government securities or other liquid, high grade
debt securities in an amount not less than the exercise price or otherwise
provide adequate cover at all times while the put option is outstanding. At
October 31, 1994, the Fund held no written option contracts.
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) 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.
(G) PORTFOLIO SECURITIES LOANED
At October 31, 1994, stocks with an aggregate value of approximately $67,530,974
were on loan to brokers. The loans were secured by cash collateral of
$73,360,463. 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
Statement of Additional Information Page 139
<PAGE>
G.T. GLOBAL HEALTH CARE FUND
to 102% of the market value of the loaned securities at the inception of each
loan. This collateral must be maintained at not less than 100% of the market
value of the loaned securities during the period of the loan. For the year ended
October 31, 1994, the Fund received $106,119 of income from securities lending
which was used to offset the Fund's custody expenses.
(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) DISTRIBUTION 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 due to differing treatments of income and 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 $85,951. These expenses
were amortized on a straightline basis over a five-year period and were fully
amortized at October 31, 1994.
(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 $(6,290,671) and $17,082,379
was reclassified from accumulated net investment loss and accumulated net
realized loss on investments and options, respectively, to paid-in capital. 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.
(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% 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
$131,040 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
Statement of Additional Information Page 140
<PAGE>
G.T. GLOBAL HEALTH CARE FUND
("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 $49,801. 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.
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 $266,952,940 and $320,104,904, respectively. There were
no purchases or sales of U.S. government obligations by the Fund for the year.
Statement of Additional Information Page 141
<PAGE>
G.T. GLOBAL HEALTH CARE 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 Strategic Income Fund; 200,000,000 were classified as shares of G.T.
Global Growth & Income Fund; 200,000,000 were classifed as G.T. Global Currency
Fund (inactive); 200,000,000 were classified as shares of G.T. Latin America
Growth Fund, and 200,000,000 were classified as shares of G.T. Global Small
Companies Fund (inactive); 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
Natural Resources Fund; 200,000,000 were classified as shares of G.T. Global
Infrastructure Fund; and 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
-------------------------- --------------------------
SHARES AMOUNT SHARES AMOUNT
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
CLASS A
Shares sold............................................................... 34,050,013 $ 640,715,739 35,297,478 $ 593,025,057
Shares issued in connection with reinvestment of distributions............ 59,903 1,108,216 0 0
----------- ------------- ----------- -------------
34,109,916 641,823,955 35,297,478 593,025,057
Shares repurchased........................................................ (37,533,619) (705,605,096) (47,076,381) (790,465,124)
----------- ------------- ----------- -------------
Net decrease.............................................................. (3,423,703) $ (63,781,141) (11,778,903) $(197,440,067)
----------- ------------- ----------- -------------
----------- ------------- ----------- -------------
<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............................................................... 7,582,598 $ 143,354,981 791,775 $ 13,252,635
Shares issued in connection with reinvestment of distributions............ 1,390 25,623 0 0
----------- ------------- ----------- -------------
7,583,988 143,380,604 791,775 13,252,635
Shares repurchased........................................................ (6,058,397) (114,888,341) (308,192) (5,227,501)
----------- ------------- ----------- -------------
Net increase.............................................................. 1,525,591 $ 28,492,263 483,583 $ 8,025,134
----------- ------------- ----------- -------------
----------- ------------- ----------- -------------
</TABLE>
Statement of Additional Information Page 142
<PAGE>
G.T. GLOBAL TELECOMMUNICATIONS 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 Telecommunications 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 January 27, 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 Telecommunications 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 January 27, 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 143
<PAGE>
G.T. GLOBAL TELECOMMUNICATIONS FUND
PORTFOLIO OF INVESTMENTS
October 31, 1994
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Equity Market % of Net
Investments Country Shares Value Assets(a)
<S> <C> <C> <C> <C>
- --------------------------------------------------------------------------
Telephone Networks (21.6%)
- -------------------------------------------
Telefonos de
Mexico, S.A.
de C.V.: MEX -- -- 3.1
"L" -- 17,235,000 $48,109,348 --
"L" ADR (b) -- 435,000 23,979,375 --
"A" -- 5,622,000 15,594,821 --
Telecomuni-
cacoes
Brasileiras
S.A. -
Telebras
(Preferred)
(c) BRZL 1,781,537,000 85,909,277 3.0
Stet (Societa
Finanziaria
Telefonica): ITLY -- -- 2.2
Ordinary -- 10,100,000 30,541,370 --
Savings -- 12,180,000 30,138,119 --
British
Telecommu-
nications PLC UK 8,702,000 56,077,655 2.0
Telefonica de
Espana SPN 3,850,000 52,185,125 1.8
Telecom Italia: ITLY -- -- 1.7
Ordinary -- 10,930,000 24,202,015 --
Savings -- 8,365,001 22,955,813 --
Compania de
Telefonos de
Chile ADR (b) CHLE 453,100 42,648,038 1.5
Tele Danmark
A.S.: DEN -- -- 1.5
ADR (b)(c) -- 937,100 26,941,625 --
"B" -- 238,133 13,726,762 --
Telecom
Corporation of
New Zealand
Ltd. NZ 9,936,000 34,641,953 1.2
Telecom
Argentina S.A.
"B" ARG 3,941,034 23,983,068 0.8
Pakistan
Telecommu-
nications
Company Ltd.
Vouchers 144A
(b)(d)(c) PAK 141,546 23,425,863 0.8
Royal PTT
Nederland N.V. NETH 401,000 12,764,493 0.5
<CAPTION>
Equity Market % of Net
Investments Country Shares Value Assets(a)
<S> <C> <C> <C> <C>
- --------------------------------------------------------------------------
Orient Telecom
& Technology
Holdings Ltd. HK 24,682,000 $11,179,885 0.4
Russian
Telecommu-
nications Dev.
Corp.
(b)(e)(c): RUS -- -- 0.3
Non-Voting -- 453,000 4,530,000 --
Voting -- 331,000 3,310,000 --
Atlantic Tele-
Network, Inc. US 638,700 6,387,000 0.2
Telecomasia
(Local) (c) THAI 1,257,000 5,044,141 0.2
Companhia
Portuguesa
Radio Marconi,
S.A. PORT 135,000 4,547,313 0.2
Compania
Peruana de
Telefonos "B"
(c) PERU 2,752,765 3,831,549 0.1
Thai Tele-
phone and
Telecommu-
nication
Public Co.
Ltd.: THAI -- -- 0.1
Local (c) -- 235,000 1,471,108 --
144A GDR
(b)(d)(c) -- 75,000 1,406,250 --
----------------
609,531,966
----------------
Telecom Equipment (17.1%)
- --------------------------------------------------------------------------
Nokia AB
(Preferred) FIN 800,540 120,688,785 4.3
Motorola, Inc. US 1,659,500 97,703,063 3.5
Alcatel Alsthom FR 491,352 45,058,897 1.6
Kyushu-
Matsushita
Electric
Industrial JPN 1,531,000 38,575,381 1.4
Glenayre
Technologies,
Inc. (c) US 563,500 35,077,875 1.2
ECI Telecommu-
nications Ltd.
(b) ISRL 1,338,800 25,939,250 0.9
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 144
<PAGE>
G.T. GLOBAL TELECOMMUNICATIONS FUND
<TABLE>
<CAPTION>
Equity Market % of Net
Investments Country Shares Value Assets(a)
- --------------------------------------------------------------------------
<S> <C> <C> <C> <C>
U.S. Robotics,
Inc. (c) US 636,000 $25,599,000 0.9
Telefonaktie-
bolaget LM
Ericsson "B"
Free SWDN 388,000 23,624,293 0.8
Champion
Technology
Holdings HK 62,809,163 20,321,277 0.7
Boston
Technology,
Inc. (c) US 914,200 15,084,300 0.5
International
Engineering
Public Com-
pany Ltd.
(Foreign) THAI 1,146,300 11,499,799 0.4
Tadiran Ltd.
(b) ISRL 415,200 8,771,100 0.3
Mitel Corpo-
ration (c) US 2,500,000 8,750,000 0.3
Netas
Telekomunik: TRKY -- -- 0.2
New (c) -- 9,900,000 3,518,955 --
Common -- 7,920,000 2,815,164 --
Prod-Art
Technology
Holdings Ltd. HK 41,604,300 3,122,860 0.1
----------------
486,149,999
----------------
Wireless Communications (10.1%)
- -------------------------------------------
DDI Corporation JPN 8,414 76,285,543 2.7
Advanced
Information
Service
(Foreign) THAI 2,986,050 52,723,192 1.9
Airtouch
Communica-
tions (c) US 1,000,000 29,875,000 1.1
United
Communication
Industry: THAI -- -- 1.1
Foreign -- 917,900 26,962,391 --
Local -- 66,000 1,949,278 --
Millicom
International
Cellular S.A.
(c) US 955,500 26,873,431 1.0
Vodafone Group
PLC UK 5,795,000 20,070,183 0.7
Telephone and
Data Systems,
Inc. US 315,600 15,622,200 0.6
Tele 2000 (c) PERU 5,472,293 15,159,729 0.5
Rogers Cantel
Mobile
Communica-
tions Class B
(c) CAN 382,000 11,674,875 0.4
<CAPTION>
Equity Market % of Net
Investments Country Shares Value Assets(a)
<S> <C> <C> <C> <C>
- --------------------------------------------------------------------------
ABC Com-
munications
Holdings Ltd. HK 6,498,000 $2,817,169 0.1
----------------
280,012,991
----------------
Telephone -- Regional/Local (7.8%)
- -------------------------------------------
Pacific Telesis
Group US 2,000,000 63,250,000 2.2
MFS Com-
munications
Company, Inc.
(c) US 1,422,900 52,647,300 1.9
Bell Atlantic
Corporation US 750,000 39,281,250 1.4
U.S. West, Inc. US 1,000,000 37,625,000 1.3
Alltel
Corporation US 670,000 17,336,250 0.6
Intermedia
Communica-
tions of
Florida, Inc.
(c) US 873,900 9,503,663 0.3
IntelCom Group,
Inc. US 215,000 3,278,750 0.1
----------------
222,922,213
----------------
Technology (7.1%)
- -------------------------------------------
Cisco Systems,
Inc. US 2,016,600 60,750,075 2.1
NETWORKING
Kyocera
Corporation JPN 584,000 44,505,576 1.6
SEMICONDUCTORS
Qualcomm, Inc.
(c) US 893,500 26,358,250 0.9
TELECOM TECHNOLOGY
NEC Corporation JPN 2,000,000 25,609,252 0.9
SEMICONDUCTORS
Fujitsu Ltd. JPN 2,000,000 22,924,410 0.8
COMPUTERS & PERIPHERALS
Shinawatra
Computer
Company, Ltd.: THAI -- -- 0.6
COMPUTERS & PERIPHERALS
Foreign -- 493,800 14,267,094 --
Local -- 81,900 2,550,337 --
AT&T Global
Info Solution
JP JPN 469,000 6,247,521 0.2
COMPUTERS & PERIPHERALS
I.I.S.
Intelligent
Information
Systems Ltd. ISRL 264,500 859,625 --
NETWORKING
----------------
204,072,140
----------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 145
<PAGE>
G.T. GLOBAL TELECOMMUNICATIONS FUND
<TABLE>
<CAPTION>
Equity Market % of Net
Investments Country Shares Value Assets(a)
- --------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Broadcasting & Publishing (7.0%)
- -------------------------------------------
Time Warner,
Inc. US 1,250,000 $44,375,000 1.6
Reuters
Holdings PLC UK 5,100,000 40,039,253 1.4
News Corpo-
ration Ltd.: AUSL -- -- 1.0
Common -- 3,814,562 23,523,935 --
ADR (b) -- 120,800 5,904,100 --
Elsevier N.V. NETH 1,525,000 15,548,310 0.5
Evergreen Media
Corporation
Class A (c) US 771,100 13,687,025 0.5
Canal Plus FR 82,676 13,637,444 0.5
Granada Group
PLC UK 1,500,000 12,733,071 0.5
International
Broadcasting
Corp. Ltd.: THAI -- -- 0.5
Foreign -- 1,373,700 10,308,261 --
Local -- 217,600 1,632,873 --
Sistem
Televisyen
Malaysia Bhd. MAL 3,718,000 8,732,824 0.3
Television
Broadcasts
Ltd. HK 1,067,000 4,929,714 0.2
Medya Holdings
AS TRKY 18,966,080 951,737 --
----------------
196,003,547
----------------
Telephone -- Long Distance (6.7%)
- -------------------------------------------
LDDS Communica-
tions, Inc.
(c) US 2,057,620 48,354,070 1.7
AT&T
Corporation US 635,500 34,952,500 1.2
IDB Communica-
tions Group,
Inc. (c) US 3,615,000 33,438,750 1.2
Philippine Long
Distance
Telephone
Company: PHIL -- -- 1.2
ADR (b) -- 478,495 27,274,215 --
Common -- 94,844 5,507,071 --
GN Store Nord
AS DEN 134,166 13,003,676 0.5
Call-Net
Enterprises,
Inc. (c): CAN -- -- 0.3
"B" -- 1,207,800 6,923,409 --
"A" -- 469,400 2,951,109 --
KDD JPN 84,100 8,641,006 0.3
<CAPTION>
Equity Market % of Net
Investments Country Shares Value Assets(a)
<S> <C> <C> <C> <C>
- --------------------------------------------------------------------------
WCT Communica-
tions, Inc.
(c) US 573,000 $3,366,375 0.1
Petersburg Long
Distance, Inc.
(b)(c)(e) CAN 310,000 2,596,250 0.1
Cam-Net
Communica-
tions Network,
Inc. (c) CAN 547,975 2,203,856 0.1
----------------
189,212,287
----------------
Capital Goods (6.5%)
- -------------------------------------------
Mannesmann AG GER 151,500 40,512,872 1.4
MACHINERY & ENGINEERING
Orbital
Sciences
Corporation
(c) US 1,417,500 30,830,625 1.1
AEROSPACE/DEFENSE
Canon Inc. JPN 1,600,000 29,739,776 1.0
OFFICE EQUIPMENT
Murata
Manufacturing
Co., Ltd. JPN 542,300 22,175,836 0.8
ELECTRICAL PLANT/EQUIPMENT
Alcatel Cable FR 133,813 15,598,951 0.6
INDUSTRIAL COMPONENTS
Olivetti Group ITLY 12,500,000 14,956,913 0.5
OFFICE EQUIPMENT
Leader
Universal
Holdings Bhd. MAL 1,649,000 9,166,489 0.3
INDUSTRIAL COMPONENTS
BICC PLC UK 1,500,000 8,292,446 0.3
ELECTRICAL PLANT/EQUIPMENT
PT Kabelmetal
Indonesia
(Local) INDO 5,100,000 7,337,707 0.3
INDUSTRIAL COMPONENTS
PT Kabelindo
Murni (Local) INDO 1,079,000 2,980,662 0.1
INDUSTRIAL COMPONENTS
PT Voksel
Electronics
(Foreign) INDO 1,106,700 1,936,215 0.1
INDUSTRIAL COMPONENTS
----------------
183,528,492
----------------
Cable Television (3.7%)
- -------------------------------------------
Comcast
Corporation
Class A US 2,840,000 46,505,000 1.6
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 146
<PAGE>
G.T. GLOBAL TELECOMMUNICATIONS FUND
<TABLE>
<CAPTION>
Equity Market % of Net
Investments Country Shares Value Assets(a)
- --------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Tele-Communica-
tions, Inc.
Class A (c) US 1,692,500 $38,292,813 1.4
Rogers
Communica-
tions, Inc.
Class B (c) CAN 1,001,400 14,721,024 0.5
International
CableTel, Inc.
(c) US 145,400 4,507,400 0.2
----------------
104,026,237
----------------
Consumer Durables (2.8%)
- -------------------------------------------
Sony Corp. JPN 750,000 45,771,375 1.5
CONSUMER ELECTRONICS
Amcol Hold-
ings Ltd. SING 10,644,000 24,652,313 0.9
CONSUMER ELECTRONICS
Edaran Otomobil
Nasional Bhd. MAL 1,426,000 10,159,795 0.4
AUTOMOBILES
----------------
80,583,483
----------------
Multi-Industry (2.4%)
- -------------------------------------------
Grupo Carso,
S.A. de C.V.
"A1" (c) MEX 4,341,000 46,230,634 1.6
Pearson PLC UK 2,300,000 23,850,179 0.8
----------------
70,080,813
----------------
Services (1.1%)
- -------------------------------------------
Compagnie
Generale des
Eaux FR 140,118 12,835,756 0.5
CONSUMER SERVICES
Sapura
Telecommu-
nications Bhd. MAL 2,365,000 10,832,059 0.4
VALUE ADDED TELEPHONE SERVICE
Radiotronica
S.A. SPN 257,500 3,500,600 0.1
TELECOM - OTHER
Grupo Mexicano
de Video ADR
(b)(e) MEX 122,000 2,165,500 0.1
LEISURE & TOURISM
Gran Cadena de
Almacenes
Colombianos COL 64,000 122,312 --
RETAILERS-OTHER
----------------
29,456,227
----------------
<CAPTION>
Equity Market % of Net
Investments Country Shares Value Assets(a)
<S> <C> <C> <C> <C>
- --------------------------------------------------------------------------
Investment Management (0.1)
- -------------------------------------------
Phatra Thanakit
Co. Ltd.
(Foreign) THAI 223,900 $2,300,096 0.1
- --------------------------------------------------------------------------
- --------------------------------------------------------------------------
Total Equity Investments
(cost $2,345,081,166)..................... 2,657,880,491 94.0
- --------------------------------------------------------------------------
- --------------------------------------------------------------------------
Warrants (0.0%)
- -------------------------------------------
Stet Wts expire
9/30/96 ITLY 69,000 1,186,831 --
TELEPHONE NETWORKS
American
Satellite
Network Wts
expire 1/1/99
(c)(e) US 65,825 0 --
WIRELESS COMMUNICATIONS
- --------------------------------------------------------------------------
- --------------------------------------------------------------------------
Total Warrants (cost $439,365)............. 1,186,831 --
- --------------------------------------------------------------------------
- --------------------------------------------------------------------------
Rights (0.3%)
- -------------------------------------------
Phatra Thanakit
Co. Ltd.
(Foreign)
Rights expire
11/3/94 (c)
(cost
$3,766,184) THAI 895,600 8,840,995 0.3
INVESTMENT MANAGEMENT
- --------------------------------------------------------------------------
- --------------------------------------------------------------------------
<CAPTION>
Option on
Currency (0.2%) Currency
<S> <C> <C> <C> <C>
- --------------------------
USD Call/ JPY
Put Option,
Strike 100,
expires
10/9/95 (cost
$8,430,000) USD 300,000,000 4,980,000 0.2
- --------------------------------------------------------------------------
- --------------------------------------------------------------------------
Structured Note (0.4%)
- -------------------------------------------
Credit Suisse
Synthetic
Equity MTN,
3.25% due
4/29/97 (cost
$7,000,000)
(This is an
equity linked
note. The
value of this
note is linked
to the
underlying
value of
Rostelecom.) USD 7,000,000 11,550,000 0.4
- --------------------------------------------------------------------------
- --------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 147
<PAGE>
G.T. GLOBAL TELECOMMUNICATIONS FUND
<TABLE>
<CAPTION>
Short-Term Principal Market % of Net
Investments Currency Amount Value Assets(a)
- --------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Treasury Bills (1.8%)
- -------------------------------------------
Mexican Cetes
due:
11/3/94
(effective
yield 11.4%) MXN 79,051,410 $23,012,145 0.8
11/24/94
(effective
yield 15.8%) MXN 67,820,650 19,556,432 0.7
11/17/94
(effective
yield 16.0%) MXN 25,413,200 7,349,601 0.3
- --------------------------------------------------------------------------
Total Treasury Bills (cost $50,416,852)....
49,918,178 1.8
- --------------------------------------------------------------------------
<CAPTION>
Market % of Net
Repurchase Agreement (1.1%) Value Assets(a)
<S> <C> <C> <C> <C>
- --------------------------------------------------------------------------
Dated October 31, 1994 with State Street
Bank & Trust Company, due November 1,
1994, for an effective yield of 4.7%
collateralized by $31,095,000 Federal Home
Loan Mortgage Corporation Discount Note,
0% due 1/27/95. (Market value $30,690,822
including accrued interest) (cost
$30,690,006)..............................
$30,690,006 1.1
- --------------------------------------------------------------------------
- --------------------------------------------------------------------------
Total Short-Term Investments
(cost $81,106,858)........................ 80,608,184 2.9
- --------------------------------------------------------------------------
- --------------------------------------------------------------------------
Total Investments
(cost $2,445,823,573)*.................... 2,765,046,501 97.8
Other Assets Less Liabilities.............. 63,436,420 2.2
- --------------------------------------------------------------------------
- --------------------------------------------------------------------------
Net Assets................................. $2,828,482,921 100.0
- --------------------------------------------------------------------------
- --------------------------------------------------------------------------
<FN>
- --------------------------------------------------------------------------------
(a) Percentages indicated are based on net assets of $2,828,482,921.
(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) Restricted securities -- At October 31, 1994, the Fund owned the following
restricted securities constituting 0.5% of net assets which may not be
publicly sold without registration under the Securities Act of 1933. (Note
1)
Additional information on restricted securities is as follows:
Acquisition Acquisition
Description Dates Shares Cost Market Value
- ------------------------------------------------------------ ----------------- ------- ----------- ------------
Russian Telecommunications Development Corporation:
Non Voting................................................ 12/22/93 453,000 $ 4,530,000 $ 4,530,000
Voting.................................................... 12/22/93 331,000 3,310,000 3,310,000
Grupo Mexicano de Video ADR................................. 07/01/92 122,000 2,013,000 2,165,000
Petersburg Long Distance, Inc............................... 02/11/93-10/5/93 310,000 2,236,250 2,596,250
American Satellite Network Wts expire 1/1/99................ 12/31/93 65,825 -- --
----------- ------------
Total................................................... $12,089,250 $ 12,601,250
----------- ------------
----------- ------------
Abbreviations:
ADR -- American Depository Receipt
GDR -- Global Depository Receipt
MTN -- Medium Term Note
* For Federal income tax purposes, cost is $2,446,743,346 and appreciation
(depreciation) of securities is as follows:
Unrealized appreciation: $ 475,856,937
Unrealized depreciation: (157,553,782)
-------------
Net unrealized
appreciation: $ 318,303,155
-------------
-------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 148
<PAGE>
G.T. GLOBAL TELECOMMUNICATIONS FUND
FORWARD FOREIGN CURRENCY CONTRACTS OUTSTANDING
OCTOBER 31, 1994
<TABLE>
<CAPTION>
Contract Delivery Unrealized
Total Contracts to Sell: Market Value Price Date Appreciation
- ------------------------------------------------------------------------------- -------------- --------- --------- ------------
<S> <C> <C> <C> <C>
Deutschemark................................................................... $ 99,175,934 1.4893 01/25/95 $ 824,066
Deutschemark................................................................... 69,353,233 1.4878 01/25/95 646,767
Deutschemark................................................................... 69,377,705 1.4884 01/25/95 622,295
Deutschemark................................................................... 99,112,339 1.4884 01/25/95 887,661
Deutschemark................................................................... 49,670,352 1.4917 01/31/95 329,648
Deutschemark................................................................... 39,715,637 1.4909 01/31/95 284,363
Deutschemark................................................................... 49,633,058 1.4906 01/31/95 366,942
Deutschemark................................................................... 99,270,112 1.4906 01/31/95 729,888
Deutschemark................................................................... 99,272,775 1.4907 01/31/95 727,225
-------------- ------------
Total Contracts to Sell (Receivable amount $680,000,000)................... $ 674,581,145 $5,418,855
-------------- ------------
-------------- ------------
<FN>
- ----------------
See Note 1 of the financial statements.
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
WRITTEN OPTION CONTRACT OUTSTANDING
OCTOBER 31, 1994
<TABLE>
<CAPTION>
Expiration
Strike Date Shares Currency
--------- ----------- ------------- -----------
<S> <C> <C> <C> <C>
JPY Call/USD Put (cost $8,430,000).................................... 92.92 10/09/95 300,000,000 USD
<CAPTION>
Market Value
-------------
<S> <C>
JPY Call/USD Put (cost $8,430,000).................................... $ 10,680,000
-------------
-------------
<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)
------------------------------------------------------------------------------------
Rights &
Equity Warrants Structured Note Short-Term Other Total
----------- ------------- --------------- --------------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
Argentina............... 0.8 0.8
Australia............... 1.0 1.0
Brazil.................. 3.0 3.0
Canada.................. 1.4 1.4
Chile................... 1.5 1.5
Denmark................. 2.0 2.0
Finland................. 4.3 4.3
France.................. 3.2 3.2
Germany................. 1.4 1.4
Hong Kong............... 1.5 1.5
Indonesia............... 0.5 0.5
Israel.................. 1.2 1.2
Italy................... 4.4 4.4
Japan................... 11.2 11.2
Malaysia................ 1.4 1.4
Mexico.................. 4.8 4.8
Netherlands............. 1.0 1.0
New Zealand............. 1.2 1.2
Pakistan................ 0.8 0.8
Peru.................... 0.6 0.6
Philippines............. 1.2 1.2
Portgual................ 0.2 0.2
Russia.................. 0.3 0.3
Singapore............... 0.9 0.9
Spain................... 1.9 1.9
Sweden.................. 0.8 0.8
Thailand................ 4.9 0.3 5.2
Turkey.................. 0.2 0.2
UK...................... 5.7 5.7
U.S..................... 30.7 0.4 2.9 2.4 36.4
-- -- -- --
--- ---------
Total................... 94.0 0.3 0.4 2.9 2.4 100.0
-- -- -- --
-- -- -- --
--- ---------
--- ---------
<FN>
- ----------------
(a) Percentages indicated are based on net assets of $2,828,482,921.
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 149
<PAGE>
G.T. GLOBAL TELECOMMUNICATIONS FUND
STATEMENT OF ASSETS
AND LIABILITIES
October 31, 1994
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Assets:
Investments in securities, at value (cost $2,445,823,573) (Note 1)................................. $2,765,046,501
U.S. currency.........................................................................
$ 51
Foreign currency (cost $20,379,987)...................................................
20,663,779 20,663,830
-----------
Receivable for securities sold..................................................................... 48,191,408
Receivable for Fund shares sold.................................................................... 16,089,479
Receivable for forward foreign currency contracts -- open (Note 1)................................. 5,418,855
Dividends and dividend withholding tax reclaims receivable......................................... 4,657,844
Interest receivable................................................................................ 1,224,874
Unamortized deferred organizational expenses (Note 1).............................................. 29,824
Cash held as collateral for securities loaned (Note 1)............................................. 254,665,344
--------------
Total assets....................................................................................... 3,115,987,959
--------------
Liabilities:
Payable for Fund shares repurchased................................................................ 12,184,690
Premium on options (cost $8,430,000)............................................................... 10,680,000
Payable for securities purchased................................................................... 5,055,414
Payable for investment management and administration fees (Note 2)................................. 2,129,685
Payable for service and distribution expenses (Note 2)............................................. 1,648,382
Payable for transfer agent fees (Note 2)........................................................... 495,238
Payable for registration fees...................................................................... 349,413
Payable for custodian fees (Note 1)................................................................ 203,991
Payable for professional fees...................................................................... 88,191
Payable for Directors' fees (Note 2)............................................................... 2,850
Accrued expenses................................................................................... 1,840
Collateral for securities loaned (Note 1).......................................................... 254,665,344
--------------
Total liabilities.................................................................................. 287,505,038
--------------
Net assets........................................................................................... $2,828,482,921
--------------
--------------
Class A:
Net asset value and redemption price per share
($1,644,401,968 DIVIDED BY 92,389,577 shares outstanding).......................................... $ 17.80
--------------
--------------
Maximum offering price per share
(100/95.25 of $17.80)*.............................................................................. $ 18.69
--------------
--------------
Class B:+
Net asset value and offering price per share
($1,184,080,953 DIVIDED BY 67,062,045 shares outstanding).......................................... $ 17.66
--------------
--------------
Net assets consist of:
Paid in capital (Note 4)........................................................................... $2,369,842,398
Accumulated net realized gain on investments, foreign currency conversions, forward foreign
currency contracts and options.................................................................... 135,486,335
Net unrealized appreciation of investments, written options, dividends and dividend withholding tax
reclaims receivable, interest receivable, securities purchased and sold, foreign currency
conversions and forward foreign currency contracts................................................ 323,154,188
--------------
Total -- representing net assets applicable to capital shares outstanding.......................... $2,828,482,921
--------------
--------------
<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 150
<PAGE>
G.T. GLOBAL TELECOMMUNICATIONS 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 $3,156,142)....................................... $ 27,209,488
Interest income (net of foreign withholding tax of $29).............................................. 14,716,746
-------------
Total investment income.............................................................................. 41,926,234
-------------
Expenses:
Investment management and administration fees (Note 2)............................................... 21,926,187
Service and distribution expenses: (Note 2)
Class A............................................................................. $ 7,330,230
Class B............................................................................. 8,894,192 16,224,422
-------------
Transfer agent fees (Note 2)......................................................................... 5,870,772
Custodian fees (Note 1).............................................................................. 1,598,727
Registration fees.................................................................................... 830,617
Professional fees.................................................................................... 219,319
Printing and postage expenses........................................................................ 188,403
Amortization of organizational expenses (Note 1)..................................................... 17,701
Directors' fees (Note 2)............................................................................. 7,494
Other................................................................................................ 50,872
-------------
Total expenses....................................................................................... 46,934,514
-------------
Net investment loss.................................................................................... (5,008,280)
-------------
Net realized and unrealized gain (loss) on investments and foreign currencies (Note 1):
Net realized gain on investments and written options.................................. 171,447,523
Net realized loss on foreign currency conversions and forward foreign currency
contracts............................................................................ (33,457,459)
-------------
Net realized gain.................................................................................... 137,990,064
-------------
Change in unrealized appreciation of dividends and dividend withholding tax reclaims
receivable, interest receivable, securities purchased and sold, foreign currency
conversions and forward foreign currency contracts................................... 3,578,825
Change in unrealized appreciation of investments...................................... 27,259,645
-------------
Net unrealized appreciation.......................................................................... 30,838,470
-------------
Net realized and unrealized gain on investments, options and foreign currencies........................ 168,828,534
-------------
Net increase in net assets resulting from operations................................................... $ 163,820,254
-------------
-------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 151
<PAGE>
G.T. GLOBAL TELECOMMUNICATIONS 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)...............................................................
$ (5,008,280) $ 4,947,873
Net realized gain on investments, written options, foreign currency conversions and forward
foreign currency contracts................................................................
137,990,064 35,389,185
Change in unrealized appreciation of investments, written options, dividends and dividend
withholding tax reclaims receivable, interest receivable, securities purchased and sold,
foreign currency conversions and forward foreign currency contracts.......................
30,838,470 300,873,503
---------------- ----------------
Net increase in net asssets resulting from operations......................................
163,820,254 341,210,561
Class A:+
Distributions to shareholders from: (Note 1)
Net investment income......................................................................
(1,139,864) (6,107,928)
Net realized gain from investments.........................................................
(20,482,527) 0
Class B:++
Distributions to shareholders from: (Note 1)
Net investment income......................................................................
(511,428) 0
Net realized gain from investments.........................................................
(9,209,255) 0
Capital share transactions: (Note 4)
Increase from capital shares sold and reinvested...........................................
1,678,630,071 1,077,285,253
Decrease from capital shares repurchased...................................................
(661,298,601) (176,576,036)
---------------- ----------------
Net increase from capital share transactions...............................................
1,017,331,470 900,709,217
---------------- ----------------
Total increase in net assets.................................................................
1,149,808,650 1,235,811,850
Net assets:
Beginning of year..........................................................................
1,678,674,271 442,862,421
---------------- ----------------
End of year................................................................................
$2,828,482,921* $1,678,674,271**
----------------
---------------- ----------------
----------------
<FN>
- ----------------
* Including undistributed net investment income of $0.
** Including undistributed net investment income of $4,224,140.
+ All capital shares issued and outstanding 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 152
<PAGE>
G.T. GLOBAL TELECOMMUNICATIONS 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++
JANUARY 27, 1992 ------------------------------
YEAR ENDED OCTOBER 31, (COMMENCEMENT YEAR ENDED
------------------------- OF OPERATIONS) TO OCTOBER 31, APRIL 1, 1993 TO
1994(C) 1993 OCTOBER 31, 1992 1994(C) OCTOBER 31, 1993
----------- ----------- ------------------- ----------- ----------------
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of year........ $ 16.92 $ 11.16 $ 11.43 $ 16.87 $ 12.68
----------- ----------- ---------- ----------- ----------------
Income from investment operations:
Net investment income................... (0.01) 0.08 0.14* (0.10) 0.01
Net realized and unrealized gain (loss)
on
investments............................ 1.17 5.83 (0.41) 1.17 4.18
----------- ----------- ---------- ----------- ----------------
Net increase (decrease) from investment
operations............................. 1.16 5.91 (0.27) 1.07 4.19
----------- ----------- ---------- ----------- ----------------
Distributions:
Net investment income................... (0.01) (0.15) (0.00) (0.01) (0.00)
Net realized gain on investments........ (0.27) (0.00) (0.00) (0.27) (0.00)
----------- ----------- ---------- ----------- ----------------
Total distributions..................... (0.28) (0.15) (0.00) (0.28) (0.00)
----------- ----------- ---------- ----------- ----------------
Net asset value, end of year.............. $ 17.80 $ 16.92 $ 11.16 $ 17.66 $ 16.87
----------- ----------- ---------- ----------- ----------------
----------- ----------- ---------- ----------- ----------------
Total investment return(d)................ 7.02% 53.6% 2.4%(a) 6.50% 33.0%(a)
Ratios and supplemental data:
Net assets, end of year (in 000's)........ $ 1,644,402 $ 1,223,340 $ 442,862 $ 1,184,081 $455,335
Ratio of net investment income to average
net assets............................... (0.02)% 0.8% 2.1%*(b) (0.52)% 0.3%(b)
Ratio of expenses to average net asset.... 1.80% 2.0% 2.3%*(b) 2.30% 2.5%(b)
Portfolio turnover rate+++................ 57% 41% 4%(b) 57% 41%
<FN>
- ----------------
+ All capital shares issued and outstanding 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 less than $0.01. Without such reimbursement, the annualized
expense ratio would have been 2.30% and the annualized ratio of net
investment income average net assets would have been 2.04% (See Note 2).
(a) Not annualized.
(b) Annualized.
(c) These selected per share data were calculated based upon weighted average
shares outstanding during the period.
(d) Total investment return does not include sales charges.
</TABLE>
Statement of Additional Information Page 153
<PAGE>
G.T. GLOBAL TELECOMMUNICATIONS FUND
NOTES TO
FINANCIAL STATEMENTS
October 31, 1994
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
G.T. Global Telecommunications 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 quoted sales 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 of the Fund are maintained in U.S. dollars. The market
values of foreign securities, currency holdings, other assets and liabilities
are recorded in the books and records of the Fund after translation to U.S.
dollars based on the exchange rates on that day. The cost of each security is
determined using historical exchange rates. Income and withholding taxes are
translated at prevailing exchange rates when 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 or 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.
In addition, the Fund may focus its investments in certain related
telecommunication industries, subjecting the Fund to greater risk than a fund
that is more diversified.
(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,
Statement of Additional Information Page 154
<PAGE>
G.T. GLOBAL TELECOMMUNICATIONS FUND
including accrued interest, is at least equal to the amount to be repaid to the
Fund under each agreement at its maturity.
(D) FORWARD FOREIGN CURRENCY CONTRACTS
A forward foreign currency contract ("Forward") 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 set aside cash, U.S. government securities or other liquid, high grade
debt securities in an amount not less than the exercise price or otherwise
provide adequate cover at all times while the put option is outstanding.
The premium paid by the Fund for the purchase of a call or put option is
included in the Fund's "Statement of Assets and Liabilities" as an investment
and subsequently "marked-to-market" to reflect the current market value of the
option. If an option which the Fund has purchased expires on the stipulated
expiration date, the Fund realizes a loss in the amount of the cost of the
option. If the Fund enters into a closing sale transaction, the Fund realizes a
gain or loss, depending on whether proceeds from the closing sale transaction
are greater or less than the cost of the option. If the Fund exercises a call
option, the cost of the securities acquired by exercising the call is increased
by the premium paid to buy the call. If the Fund exercises a put option, it
realizes a gain or loss from the sale of the underlying security, and the
proceeds from such sale are decreased by the premium originally paid.
The risk associated with purchasing options is limited to the premium originally
paid. The risk in writing a call option is that the Fund may forego the
opportunity of profit if the market value of the underlying security or index
increases and the option is exercised. The risk in writing a put option is that
the Fund may incur a loss if the market value of the underlying security or
index decreases and the option is exercised. In addition, there is the risk the
Fund may not be able to enter into a closing transaction because of an illiquid
secondary market.
(F) 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.
(G) PORTFOLIO SECURITIES LOANED
At October 31, 1994, stocks with an aggregate value of approximately
$220,840,237, were on loan to brokers. The loans were secured by cash collateral
of $254,665,344. 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 the loan. For
the year ended October 31, 1994, the Fund received $910,464 of income from
securities lending which was used to offset the Fund's custody expenses.
Statement of Additional Information Page 155
<PAGE>
G.T. GLOBAL TELECOMMUNICATIONS FUND
(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 $78,843. These expenses
are being amortized on a straightline 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. As of November 1, 1993, the cumulative
effect of such differences totaling $882,609 was reclassified from undistributed
net investment income to accumulated net realized gains on investments and
options. Net investment loss, net realized gain on investments, foreign currency
conversions and forward foreign currency contracts 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.
(N) RESTRICTED SECURITIES
The Fund is permitted to invest in privately placed restricted securities. These
securities may be resold in transactions exempt from registration or to the
public if the securities are registered. Disposal of these securities may
involve time-consuming negotiations and expense, and prompt sale at an
acceptable price may be difficult. At the end of the period, restricted
securities (excluding 144A issues) are shown at the end of the Fund's Portfolio
of Investments.
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
$2,477,493 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 were first made available on April 1, 1993. Class B shares are
not subject to initial sales charges. When Class B shares are sold, G.T. Global
Statement of Additional Information Page 156
<PAGE>
G.T. GLOBAL TELECOMMUNICATIONS FUND
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 $1,731,244. 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
expense) 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.
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 $2,543,023,904 and $1,513,013,543, respectively. There
were no purchases or sales of U.S. government obligations by the Fund for the
year ended October 31, 1994.
Statement of Additional Information Page 157
<PAGE>
G.T. GLOBAL TELECOMMUNICATIONS 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, 400,000,000 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; 200,000,000 were classified as shares of G.T. Global
Emerging Markets 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
-------------------------- --------------------------
CLASS A SHARES AMOUNT SHARES AMOUNT
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Shares sold............................................................... 49,183,489 $ 833,820,941 43,772,780 $ 640,295,982
Shares issued in connection with reinvestment of distributions............ 1,050,827 17,160,181 338,520 3,892,995
----------- ------------- ----------- -------------
50,234,316 850,981,122 44,111,300 644,188,977
Shares repurchased........................................................ (30,135,506) (509,780,043) (11,493,152) (164,060,126)
----------- ------------- ----------- -------------
Net increase.............................................................. 20,098,810 $ 341,201,079 32,618,148 $ 480,128,851
----------- ------------- ----------- -------------
----------- ------------- ----------- -------------
<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............................................................... 48,594,410 $ 819,697,227 27,770,391 $ 433,096,276
Shares issued in connection with reinvestment of distributions............ 488,736 7,951,722 0 0
----------- ------------- ----------- -------------
49,083,146 827,648,949 27,770,391 433,096,276
Shares repurchased........................................................ (9,006,454) (151,518,558) (785,039) (12,515,910)
----------- ------------- ----------- -------------
Net increase.............................................................. 40,076,692 $ 676,130,391 26,985,352 $ 420,580,366
----------- ------------- ----------- -------------
----------- ------------- ----------- -------------
</TABLE>
5. WRITTEN OPTIONS
The Fund's written options contracts activity for the year ended October 31,
1994, was as follows:
<TABLE>
<CAPTION>
SHARES PREMIUMS
----------- ----------
<S> <C> <C>
Options outstanding at October 31, 1993................................................................... 0 $ 0
Options written........................................................................................... 300,000,000 8,430,000
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................................................................... 300,000,000 $8,430,000
----------- ----------
----------- ----------
</TABLE>
- --------------
FEDERAL TAX INFORMATION:
For Federal income tax purposes, the Fund had distributions from long-term
capital gains of $22,547,390.
Statement of Additional Information Page 158
<PAGE>
G.T. GLOBAL CONSUMER PRODUCTS AND SERVICES FUND
REPORT OF
INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
To the Board of Directors of
G.T. Investment Funds, Inc. and the
Shareholders of G.T. Investment Funds, Inc.:
G.T. Global Consumer Products and Services Fund
We have audited the accompanying statement of assets and liabilities of G.T.
Investment Funds, Inc. (G.T. Global Consumer Products and Services Fund) as of
December 20, 1994. The financial statement is the responsibility of the Fund's
management. Our responsibility is to express an opinion on the financial
statement based on our audit.
We conducted our audit 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 statement is free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statement. Our procedures included
confirmation of cash held by the custodian as of December 20, 1994. 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 audit provides a reasonable basis for our
opinion.
In our opinion, the statement of assets and liabilities referred to above
present fairly, in all material respects, the financial position of G.T.
Investment Funds, Inc.: (G.T. Global Consumer Products and Services Fund) as of
December 20, 1994, in conformity with generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
BOSTON, MASSACHUSETTS
DECEMBER 20, 1994
Statement of Additional Information Page 159
<PAGE>
G.T. GLOBAL CONSUMER PRODUCTS AND SERVICES FUND
STATEMENT OF ASSETS
AND LIABILITIES
December 20, 1994
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
G.T. GLOBAL
CONSUMER PRODUCTS
AND SERVICES FUND
-------------------
<S> <C>
Assets:
Investment in Portfolio...................................................................................... $ 100,000
Unamortized deferred organization expenses (Note 2).......................................................... 51,500
----------
Total assets............................................................................................... 151,500
----------
Liabilities:
Payable for deferred organization expenses (Note 2).......................................................... 51,500
----------
Total liabilities.......................................................................................... 51,500
----------
Commitments (Note 2 and 3)
NET ASSETS, applicable to 4,374.453 shares of Class A common stock at
$0.0001 par value, and 4,374.453 shares of Class B common stock at
$0.0001 par value, issued and outstanding (Note 1)........................................................... $ 100,000
----------
----------
CLASS A:
NET ASSET VALUE AND REDEMPTION PRICE PER SHARE................................................................. $ 11.43
----------
----------
MAXIMUM OFFERING PRICE PER SHARE (100/95.25 of $11.43)
reduced on sales of $50,000 or more and in certain other circumstances --
see "How to Invest" and "How to Make Exchanges".............................................................. $ 12.00
----------
----------
CLASS B:+
NET ASSET VALUE AND OFFERING PRICE PER SHARE................................................................... $ 11.43
----------
----------
<FN>
- ----------------
+ 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 160
<PAGE>
G.T. GLOBAL CONSUMER PRODUCTS AND SERVICES FUND
NOTES TO STATEMENT OF
ASSETS AND LIABILITIES
December 20, 1994
- --------------------------------------------------------------------------------
NOTE 1
G.T. Global Consumer Products and Services 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"). The Fund is classified as a diversified, open-end
management investment company. The Company has 6 billion shares of common stock
authorized at par value $0.0001. Of this amount, 200 million shares have been
classified as shares of the Fund; 100 million shares of the Fund have been
classified as Class A shares and 100 million shares of the Fund have been
classified as Class B shares.
The Fund invests substantially all its investable assets in its corresponding
Portfolio (Global Consumer Products and Services Portfolio), which is registered
as an open-end management investment company under the 1940 Act and has an
investment objective, policies and limitations substantially identical to those
of the Fund.
NOTE 2
Costs incurred by the Fund in connection with its organization, estimated at
$51,500, will be deferred and amortized on a straight-line basis for a five-year
period beginning at the commencement of the Fund's operations. G.T. Capital has
advanced certain of the Fund's organization costs incurred to date and the Fund
will reimburse G.T. Capital for the amount of these advances. In the event that
G.T. Capital redeems any of the initial 4,374.906 Class A or 4,374.906 Class B
shares of the Fund within the five-year amortization period, the Fund's
unamortized organization expenses allocable to the shares redeemed will be
deducted from G.T. Capital's redemption proceeds.
NOTE 3
G.T. Capital serves as the administrator of the Fund. The Fund pays G.T. Capital
administration fees, calculated daily and paid monthly, at an annualized rate of
0.25% of the Fund's average daily net assets. In addition, the Fund bears its
pro rata portion of the investment management and administration fees paid by
its corresponding Portfolio to G.T. Capital. The Portfolio pays such fees, based
on the average daily net assets of the Portfolio, at the annualized rate of
0.725% on the first $500 million, 0.70% on the next $500 million, 0.675% on he
next $500 million, and 0.65% on amounts in excess of $2.5 billion.
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 Class A shares,
and reallows a portion of such charges to dealers through which the sales are
made. 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. 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 each class' respective 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.
Statement of Additional Information Page 161
<PAGE>
G.T. GLOBAL CONSUMER PRODUCTS AND SERVICES FUND
Under 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.
Statement of Additional Information Page 162
<PAGE>
G.T. GLOBAL CONSUMER PRODUCTS AND SERVICES FUND
STATEMENT OF ASSETS
AND LIABILITIES
April 30, 1995 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Assets:
<S> <C>
Investments in Global Consumer Products and Services Portfolio (cost $1,933,316) (Note 1)..............
$1,954,472
Receivable for expense reimbursement (Note 2)..........................................................
170,013
Unamortized organizational expenses (Note 1)...........................................................
48,085
Receivable for Fund shares sold........................................................................
30,012
----------
Total assets...........................................................................................
2,202,582
----------
Liabilities:
Payable for deferred organizational expenses (Note 1)..................................................
42,323
Payable for printing and postage expenses..............................................................
18,000
Payable for registration fees..........................................................................
9,185
Payable for professional fees..........................................................................
7,845
Payable for administration fees (Note 2)...............................................................
1,173
Payable for transfer agent fees (Note 2)...............................................................
1,167
Payable for service and distribution expenses (Note 2).................................................
971
Payable for fund accounting fees.......................................................................
94
Accrued expenses.......................................................................................
595
----------
Total liabilities......................................................................................
81,353
----------
Net assets...............................................................................................
$2,121,229
----------
----------
Class A:
Net asset value and redemption price per share
($1,615,464 DIVIDED BY 138,685 shares outstanding).....................................................
$ 11.65
----------
----------
Maximum offering price per share
(100/95.25 of $11.65)*..................................................................................
$ 12.23
----------
----------
Class B:+
Net asset value and redemption price per share
($505,765 DIVIDED BY 43,472 shares outstanding)........................................................
$ 11.63
----------
----------
Net assets consist of:
Paid in capital (Note 3)...............................................................................
$2,094,817
Undistributed net investment income....................................................................
12,183
Accumulated net realized loss on investments and foreign currency transactions -- Global Consumer
Products and Services Portfolio.......................................................................
(6,927)
Net unrealized depreciation on translation of assets and liabilities in foreign currencies -- Global
Consumer Products and Services Portfolio..............................................................
(191)
Net unrealized appreciation of investments -- Global Consumer Products and Services Portfolio..........
21,347
----------
Total -- representing net assets applicable to capital shares outstanding..............................
$2,121,229
----------
----------
- ----------------
<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 163
<PAGE>
G.T. GLOBAL CONSUMER PRODUCTS AND SERVICES FUND
STATEMENT OF OPERATIONS
December 30, 1994 (commencement of operations) to April 30, 1995
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Investment income:
Interest income -- Global Consumer Products and Services Portfolio....................................... $ 16,808
Dividend income -- Global Consumer Products and Services Portfolio....................................... 7,024
---------
Total investment income.................................................................................. 23,832
---------
Expenses:
Expenses -- Global Consumer Products and Services Portfolio.............................................. 24,076
Registration fees........................................................................................ 97,000
Legal fees............................................................................................... 19,200
Printing and postage expenses............................................................................ 18,000
Audit fees............................................................................................... 8,400
Directors' fees and expenses (Note 2).................................................................... 3,600
Amortization of organizational expenses (Note 1)......................................................... 3,415
Transfer agent fees (Note 2)............................................................................. 2,767
Service and distribution expenses (Note 2):
Class A..................................................................................... $ 1,953
Class B..................................................................................... 784 2,737
---------
Administration fees (Note 2)............................................................................. 1,173
Fund accounting fees..................................................................................... 94
Other.................................................................................................... 1,200
---------
Total expenses before expense reimbursement.............................................................. 181,662
Less expense reimbursement (Note 2).................................................................... (170,013)
---------
Total net expenses....................................................................................... 11,649
---------
Net investment income...................................................................................... 12,183
---------
Net realized and unrealized gain (loss) on investments and foreign currencies:
Net realized loss on investments -- Global Consumer Products and Services Portfolio........... (3,890)
Net realized loss on foreign currency transactions -- Global Consumer Products and Services
Portfolio.................................................................................... (3,037)
---------
Net realized loss during the period.................................................................... (6,927)
Net change in unrealized depreciation on translation of assets and liabilities in foreign
currencies -- Global Consumer Products and Services Portfolio................................ (191)
Net change in unrealized appreciation of investments -- Global Consumer Products and Services
Portfolio.................................................................................... 21,347
---------
Net unrealized appreciation during the period.......................................................... 21,156
---------
Net realized and unrealized gain on investments and foreign currencies -- Global Consumer Products
and Services Portfolio.................................................................................... 14,229
---------
Net increase in net assets resulting from operations....................................................... $ 26,412
---------
---------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 164
<PAGE>
G.T. GLOBAL CONSUMER PRODUCTS AND SERVICES FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DECEMBER 30, 1994
(COMMENCEMENT OF OPERATIONS)
TO APRIL 30, 1995
(UNAUDITED)
-----------------------------
<S> <C>
Increase in net assets
Operations:
Net investment income..............................................................................
$ 12,183
Net realized loss on investments and foreign currency transactions -- Global Consumer Products and
Services Portfolio................................................................................
(6,927)
Net change in unrealized depreciation on translation of assets and liabilites in foreign currencies
-- Global Consumer Products and Services Portfolio................................................
(191)
Net change in unrealized appreciation of investments -- Global Consumer Products and Services
Portfolio.........................................................................................
21,347
-----------
Net increase in net assets resulting from operations...............................................
26,412
Capital share transactions (Note 3):
Increase from shares sold..........................................................................
2,028,535
Decrease from shares repurchased...................................................................
(33,718)
-----------
Net increase from capital share transactions.......................................................
1,994,817
-----------
Total increase in net assets.........................................................................
2,021,229
Net assets:
Beginning of period................................................................................
100,000
-----------
End of period......................................................................................
$ 2,121,229
-----------
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 165
<PAGE>
G.T. GLOBAL CONSUMER PRODUCTS AND SERVICES 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
DECEMBER 30, 1994 DECEMBER 30, 1994
(COMMENCEMENT OF OPERATIONS) (COMMENCEMENT OF OPERATIONS)
TO APRIL 30, 1995 TO APRIL 30, 1995
(UNAUDITED)* (UNAUDITED)*
---------------------------- ----------------------------
<S> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period................................. $ 11.43 $ 11.43
------- -------
Income from investment operations:
Net investment income.............................................. 0.10 0.08
Net realized and unrealized gain on investments.................... 0.12 0.12
------- -------
Net increase in net asset value from investment operations........... 0.22 0.20
------- -------
Net asset value, end of period....................................... $ 11.65 $ 11.63
------- -------
------- -------
Total investment return (c).......................................... 1.92%(b) 1.75%(b)
Ratios and supplemental data:
Net assets, end of period (in 000's)................................. $ 1,615 $ 506
Ratio of net investment income to average net assets:
With reimbursement by G.T. Capital Management, Inc............... 2.66%(a) 2.16%(a)
Without reimbursement by G.T. Capital Management, Inc............ (33.87)%(a) (34.37)%(a)
Ratio of expenses to average net assets:
With reimbursement by G.T. Capital Management, Inc............... 2.40%(a) 2.90%(a)
Without reimbursement by G.T. Capital Management, Inc............ 38.93%(a) 39.43%(a)
- ----------------
<FN>
(a) Annualized.
(b) Not annualized.
(c) Total investment return does not include sales charges.
* These selected per share data were calculated based upon weighted average
shares outstanding during the period.
</TABLE>
Statement of Additional Information Page 166
<PAGE>
G.T. GLOBAL CONSUMER PRODUCTS AND SERVICES FUND
NOTES TO
FINANCIAL STATEMENTS
April 30, 1995 (Unaudited)
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
G.T. Global Consumer Products and Services 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 twelve series of shares in operation, each series corresponding
to a distinct portfolio of investments. The Fund invests substantially all of
its investable assets in Global Consumer Products and Services Portfolio
("Portfolio"), which is registered as an open-end management investment company
under the 1940 Act and has investment objectives, policies and limitations
substantially identical to those of the Fund. The value of the Fund's investment
in the Portfolio reflects the Fund's proportionate interest in the net assets of
the Portfolio. The financial statements of the Portfolio, including the
Portfolio of Investments, are included elsewhere in this Report and should be
read in conjunction with the Fund's financial statements.
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) INVESTMENT VALUATION
Valuation of securities and other investment practices by the Portfolio are
discussed in Note 1 of the Portfolio's Notes to Financial Statements which are
included elsewhere in this Report.
(B) 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.
(C) 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 Portfolio and timing differences.
(D) 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 $51,500. These expenses
are being amortized on a straightline basis over a five-year period.
2. RELATED PARTIES
G.T. Capital Management, Inc. ("G.T. Capital") is the Fund's administrator. The
Fund pays administration fees to G.T. Capital at the annualized rate of 0.25% of
the Fund's average daily net assets. 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 items) 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 period ended April 30, 1995, G.T. Global retained $897
of such sales charges. G.T. Global also makes ongoing shareholder servicing and
trail commission payments to dealers whose clients hold Class A shares.
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 167
<PAGE>
G.T. GLOBAL CONSUMER PRODUCTS AND SERVICES FUND
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 period ended April 30,
1995, G.T. Global collected CDSCs in the amount of $80. 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 plans of distribution 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 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.
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 168
<PAGE>
G.T. GLOBAL CONSUMER PRODUCTS AND SERVICES FUND
3. CAPITAL SHARES
At April 30, 1995, 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 Emerging
Markets 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 Strategic Income
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 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 Financial Services Fund;
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>
DECEMBER 30, 1994
(COMMENCEMENT OF
OPERATIONS)
TO APRIL 30, 1995
(UNAUDITED)
---------------------
CLASS A SHARES AMOUNT
- ---------------------------------------------------------------------------------------------------- --------- ----------
<S> <C> <C>
Shares sold......................................................................................... 135,068 $1,553,003
Shares repurchased.................................................................................. (757) (8,798)
--------- ----------
Net increase........................................................................................ 134,311 $1,544,205
--------- ----------
--------- ----------
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 30, 1994
(COMMENCEMENT OF
OPERATIONS)
TO APRIL 30, 1995
(UNAUDITED)
--------------------
CLASS B SHARES AMOUNT
- ------------------------------------------------------------------------------------------------------ --------- ---------
<S> <C> <C>
Shares sold........................................................................................... 41,247 $ 475,532
Shares repurchased.................................................................................... (2,149) (24,920)
--------- ---------
Net increase.......................................................................................... 39,098 $ 450,612
--------- ---------
--------- ---------
</TABLE>
4. SUBSEQUENT EVENT
On June 1, 1995, the Fund, along with the other series of G.T. Investment Funds,
Inc., commenced offering a new class of shares, the "Advisor Class" shares.
These shares are available subject to certain terms and conditions to employee
benefit plans; to investor accounts managed or advised by financial planners,
bank trust departments, or under a "wrap fee" program; and to other accounts
advised by companies affiliated with the G.T. Group. With respect to the
issuance of "Advisor Class" shares, 100,000,000 shares were classified as shares
of each of the fourteen series of the Company and designated as "Advisor Class"
common stock. 1,400,000,000 shares remain unclassified.
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 169
<PAGE>
GLOBAL CONSUMER PRODUCTS AND SERVICES PORTFOLIO
PORTFOLIO OF INVESTMENTS
April 30, 1995 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
% of Net
Market Assets
Equity Investments Country Shares Value (DELTA)
- ---------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Consumer Non-Durables
(22.8%)
Philip Morris Cos.,
Inc...................... US 1,675 $ 113,481 5.8
TOBACCO
Amway Asia Pacific Ltd.... HK 2,700 96,863 5.0
HOUSEHOLD PRODUCTS
RJR Nabisco Holdings
Corp..................... US 2,980 81,578 4.2
TOBACCO
Procter & Gamble Co....... US 1,100 76,863 3.9
HOUSEHOLD PRODUCTS
Mattel, Inc............... US 3,200 76,000 3.9
TOYS
------------
444,785
------------
Retailers (16.5%)
American Stores Co........ US 3,400 87,122 4.4
RETAILERS-FOOD
Tandy Corp................ US 1,700 84,150 4.3
RETAILERS-OTHER
AnnTaylor Stores,
Inc.(CHECK MARK)......... US 3,100 77,888 4.0
RETAILERS-APPAREL
REX Stores Corp.(CHECK
MARK).................... US 5,500 74,938 3.8
RETAILERS-OTHER
------------
324,098
------------
Services (14.9%)
Sbarro, Inc............... US 3,000 77,250 3.9
RESTAURANTS
Heritage Media Corp.
'A'(CHECK MARK).......... US 3,000 76,810 3.9
BROADCASTING &
PUBLISHING
La Quinta Inns, Inc....... US 2,400 71,700 3.7
LODGING
ServiceMaster L.P......... US 2,700 65,568 3.4
CONSUMER SERVICES
------------
291,328
------------
Consumer Durables (13.3%)
Singer Co. N.V............ HK 3,800 96,425 4.9
APPLIANCES & HOUSEHOLD
Three-Five Systems,
Inc.(CHECK MARK)......... US 3,500 84,875 4.4
CONSUMER ELECTRONICS
Nokia AB 'K'.............. FIN 1,900 78,024 4.0
CONSUMER ELECTRONICS
------------
259,324
------------
Beverages - Alcoholic (7.4%)
John Labatt Ltd........... CAN 4,700 78,247 4.0
Noble China(CHECK MARK)... CAN 21,000 67,219 3.4
------------
145,466
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 170
<PAGE>
GLOBAL CONSUMER PRODUCTS AND SERVICES PORTFOLIO
<TABLE>
<CAPTION>
% of Net
Market Assets
Equity Investments Country Shares Value (DELTA)
- ---------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Textiles & Apparel (4.3%)
Yue Yuen Industrial
Holdings................. HK 360,000 $ 83,250 4.3
------------
Finance (3.9%)
McArthur Glen Realty
Corp..................... US 5,700 75,525 3.9
REAL ESTATE INVESTMENT
TRUST
------------ -----
Total Equity Investments
(cost $1,603,925).......... 1,623,776 83.1
------------ -----
------------ -----
<CAPTION>
% of Net
Principal Market Assets
Short-Term Investments Currency Amount Value (DELTA)
- ---------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Repurchase Agreements
(19.2%)
United States (19.2%)
Dated April 28, 1995
with State Street Bank
& Trust Company, due
May 1, 1995, for an
effective yield of
5.89%, collateralized
by $390,000 Federal
Home Loan Bank, 6.06%
due 4/16/98 (market
value of collateral is
$381,113, including
accrued interest) (cost
$376,185).............. 376,185 19.2
------------
Treasury Bills (4.0%)
Mexico (4.0%)
Mexican Tesobonos,
effective yield 16.77%,
due 7/27/95 (cost
$77,142)............... USD 82,000 78,638 4.0
------------ -----
Total Short-Term Investments
(cost $453,327)............ 454,823 23.2
------------ -----
Total Investments (cost
$2,057,252)*............... 2,078,599 106.3
Other Assets and
Liabilities................ (124,027) (6.3)
------------ -----
Net Assets.................. $ 1,954,572 100.0
------------ -----
------------ -----
<FN>
-----------------
(DELTA) Percentages indicated are based on net assets of $1,954,572.
(CHECK Non-income producing security.
MARK)
* For Federal income tax purposes, cost is $2,057,252 and
appreciation (depreciation) is as follows:
Unrealized appreciation: $ 73,276
Unrealized depreciation: (51,929)
-------------
Net unrealized appreciation: $ 21,347
-------------
-------------
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
The Fund's Portfolio of Investments at April 30, 1995 was concentrated in the
following countries:
<TABLE>
<CAPTION>
Percentage of Net Assets (DELTA)
----------------------------------
Country (Country Code/ Currency Code) Equity Short-Term Other Total
- -------------------------------------- ------ ---------- ----- -----
<S> <C> <C> <C> <C>
Canada (CAN/CAD)...................... 7.4 7.4
Finland (FIN/FIM)..................... 4.0 4.0
Hong Kong (HK/HKD).................... 14.2 14.2
Mexico (MEX/MXN)...................... 4.0 4.0
United States (US/USD)................ 57.5 19.2 (6.3 ) 70.4
------ --- ----- -----
Total................................. 83.1 23.2 (6.3 ) 100
------ --- ----- -----
------ --- ----- -----
<FN>
- ----------------
(DELTA) Percentages indicated are based on net assets of $1,954,572.
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 171
<PAGE>
GLOBAL CONSUMER PRODUCTS AND SERVICES PORTFOLIO
STATEMENT OF ASSETS
AND LIABILITIES
April 30, 1995 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Assets:
Investments in securities, at value (cost $1,681,067) (Note 1)............................................ $1,702,414
Repurchase agreement, at value and cost (Note 1).......................................................... 376,185
U.S. currency..................................................................................
$ 523
Foreign currencies (cost $68,437)..............................................................
68,367 68,890
---------
Receivable for securities sold (Note 1)................................................................... 142,281
Dividends receivable...................................................................................... 528
----------
Total assets.............................................................................................. 2,290,298
----------
Liabilities:
Payable for securities purchased.......................................................................... 311,650
Payable for professional fees............................................................................. 10,800
Payable for printing and postage expenses................................................................. 6,000
Payable for investment management and administration fees (Note 2)........................................ 3,230
Payable for Trustees' fees and expenses (Note 2).......................................................... 2,400
Payable for custodian fees (Note 1)....................................................................... 446
Accrued expenses.......................................................................................... 1,200
----------
Total liabilities......................................................................................... 335,726
----------
Net assets.................................................................................................. $1,954,572
----------
----------
Net assets consist of:
Paid in capital........................................................................................... $1,940,587
Accumulated net investment loss........................................................................... (244)
Accumulated net realized loss on investments and foreign currency transactions............................ (6,927)
Net unrealized depreciation on translation of assets and liabilities in foreign currencies................ (191)
Net unrealized appreciation of investments................................................................ 21,347
----------
Total -- representing net assets applicable to shares of beneficial interest outstanding.................. $1,954,572
----------
----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 172
<PAGE>
GLOBAL CONSUMER PRODUCTS AND SERVICES PORTFOLIO
STATEMENT OF OPERATIONS
December 30, 1994 (commencement of operations) to April 30, 1995
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Investment income (Note 1):
Interest................................................................................................... $ 16,808
Dividends.................................................................................................. 7,024
---------
Total investment income.................................................................................... 23,832
---------
Expenses:
Audit fees................................................................................................. 8,400
Printing and postage expenses.............................................................................. 6,000
Investment management and administration fees (Note 2)..................................................... 3,230
Legal fees................................................................................................. 2,400
Trustees' fees and expenses (Note 2)....................................................................... 2,400
Custodian and fund accounting fees (Note 1)................................................................ 446
Other...................................................................................................... 1,200
---------
Total expenses............................................................................................. 24,076
---------
Net investment loss.......................................................................................... (244)
---------
Net realized and unrealized gain (loss) on investments and foreign currencies (Note 1):
Net realized loss on investments................................................................ $ (3,890)
Net realized loss on foreign currency transactions.............................................. (3,037)
---------
Net realized loss during the period...................................................................... (6,927)
Net change in unrealized depreciation on translation of assets and liabilities in foreign
currencies..................................................................................... (191)
Net change in unrealized appreciation of investments............................................ 21,347
---------
Net unrealized appreciation during the period............................................................ 21,156
---------
Net realized and unrealized gain on investments and foreign currencies....................................... 14,229
---------
Net increase in net assets resulting from operations......................................................... $ 13,985
---------
---------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 173
<PAGE>
GLOBAL CONSUMER PRODUCTS AND SERVICES PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DECEMBER 30, 1994
(COMMENCEMENT OF OPERATIONS)
TO APRIL 30, 1995 (UNAUDITED)
-----------------------------
<S> <C>
Increase in net assets
Operations:
Net investment loss................................................................................
$ (244)
Net realized loss on investments and foreign currency transactions.................................
(6,927)
Net change in unrealized depreciation on translation of assets and liabilities in foreign
currencies........................................................................................
(191)
Net change in unrealized appreciation of investments...............................................
21,347
-----------
Net increase in net assets resulting from operations...............................................
13,985
Beneficial interest transactions:
Contributions......................................................................................
1,998,501
Withdrawals........................................................................................
(158,014)
-----------
Net increase from beneficial interest transactions.................................................
1,840,487
-----------
Total increase in net assets.........................................................................
1,854,472
Net assets:
Beginning of period................................................................................
100,100
-----------
End of period......................................................................................
$ 1,954,572
-----------
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 174
<PAGE>
GLOBAL CONSUMER PRODUCTS AND SERVICES PORTFOLIO
SUPPLEMENTARY DATA
- --------------------------------------------------------------------------------
Contained below are ratios and supplemental data that have been derived from
information provided in the financial statements.
<TABLE>
<CAPTION>
DECEMBER 30, 1994
(COMMENCEMENT OF OPERATIONS)
TO APRIL 30, 1995 (UNAUDITED)
-----------------------------
<S> <C>
Ratios and supplemental data:
Net assets, end of period (in 000's)................................................................. $ 1,955
Ratio of net investment income to average net assets................................................. (0.05)%(a)
Ratio of operating expenses to average net assets.................................................... 5.36%(a)
Portfolio turnover rate.............................................................................. 244%(a)
- ----------------
<FN>
(a) Annualized.
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 175
<PAGE>
GLOBAL CONSUMER PRODUCTS AND SERVICES PORTFOLIO
NOTES TO
FINANCIAL STATEMENTS
April 30, 1995 (Unaudited)
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
Global Consumer Products and Services Portfolio ("Portfolio") is organized as a
New York Trust and is registered under the Investment Company Act of 1940, as
amended ("1940 Act"), as a diversified, open-end management investment company.
The following is a summary of significant accounting policies consistently
followed by the Portfolio in the preparation of the financial statements. The
policies are in conformity with generally accepted accounting principles.
(A) PORTFOLIO VALUATION
The Portfolio calculates the net asset value of and completes orders to purchase
or repurchase Portfolio shares of beneficial interest 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
Portfolio's Board of Trustees.
Portfolio securities which are primarily traded on foreign exchanges are
generally valued at the preceding closing values of such securities on their
respective exchanges, and those values are then translated into U.S. dollars at
the current exchange rates, except that when an occurrence subsequent to the
time a value was so established is likely to have materially changed such value,
then the fair value of those securities will be determined by consideration of
other factors by or under the direction of the Portfolio's Board of Trustees.
(B) FOREIGN CURRENCY TRANSLATION
The accounting records of the Portfolio are maintained in U.S. dollars. The
market values of foreign securities, currency holdings, and other assets and
liabilities are recorded in the books and records of the Portfolio after
translation to U.S. dollars based on the exchange rates on that day. The cost of
each security is determined using historical exchange rates. Income and
withholding taxes are translated at prevailing exchange rates when earned or
incurred.
The Portfolio 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 currencies, currency gains or losses realized between the trade and
settlement dates on securities transactions, and the difference between the
amounts of dividends, interest, and foreign withholding taxes recorded on the
Portfolio's books and the U.S. dollar equivalent of the amounts actually
received or paid. Net unrealized foreign exchange gains or losses arise from
changes in the value of assets and liabilities other than investments in
securities at period end, resulting from changes in exchange rates.
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 176
<PAGE>
GLOBAL CONSUMER PRODUCTS AND SERVICES PORTFOLIO
(C) REPURCHASE AGREEMENTS
With respect to repurchase agreements entered into by the Portfolio, it is the
Portfolio's policy to always receive, as collateral, United States government
securities or other high quality debt securities of which the value, including
accrued interest, is at least equal to the amount to be repaid to the Portfolio
under each agreement at its maturity.
(D) FORWARD FOREIGN CURRENCY CONTRACTS
A forward foreign currency contract ("Forward Contracts") is an agreement
between two parties to buy and sell a currency at a set price on a future date.
The market value of the Forward Contract fluctuates with changes in currency
exchange rates. The Forward Contract is marked-to-market daily and the change in
market value is recorded by the Portfolio as an unrealized gain or loss. When
the Forward Contract is closed, the Portfolio 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. Forward Contracts involve market risk in excess
of the amount shown in the Portfolio's "Statement of Assets and Liabilities."
The Portfolio 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
Portfolio may enter into Forward Contracts in connection with planned purchases
or sales of securities, or to hedge against adverse fluctuations in exchange
rates between currencies.
(E) OPTION ACCOUNTING PRINCIPLES
When the Portfolio writes a call or put option, an amount equal to the premium
received is included in the Portfolio's "Statement of Assets and Liabilities" as
an asset and an equivalent liability. The amount of the liability is
subsequently marked-to-market to reflect the current market value of the option.
The current market value of an option listed on a traded exchange is valued at
its last bid price, or, in the case of an over-the-counter option, is valued at
the average of the last bid prices obtained from brokers. If an option expires
on its stipulated expiration date or if the Portfolio enters into a closing
purchase transaction, a gain or loss is realized without regard to any
unrealized gain or loss on the underlying security, and the liability related to
such option is extinguished. If a written call option is exercised, a gain or
loss is realized from the sale of the underlying security and the proceeds of
the sale are increased by the premium originally received. If a written put
option is exercised, the cost of the underlying security purchased would be
decreased by the premium originally received. The Portfolio can write options
only on a covered basis, which, for a call, requires that the Portfolio holds
the underlying security and, for a put, requires the Portfolio to set aside
cash, U.S. government securities or other liquid, high-grade debt securities in
an amount not less than the exercise price or otherwise provide adequate cover
at all times while the put option is outstanding. The Portfolio may use options
to manage its exposure to the stock market and to fluctuations in currency
values or interest rates.
The premium paid by the Portfolio for the purchase of a call or put option is
included in the Portfolio's "Statement of Assets and Liabilities" as an
investment and subsequently "marked-to-market" to reflect the current market
value of the option. If an option which the Portfolio has purchased expires on
the stipulated expiration date, the Portfolio realizes a loss in the amount of
the cost of the option. If the Portfolio enters into a closing sale transaction,
the Portfolio realizes a gain or loss, depending on whether proceeds from the
closing sale transaction are greater or less than the cost of the option. If the
Portfolio exercises a call option, the cost of the securities acquired by
exercising the call is increased by the premium paid to buy the call. If the
Portfolio exercises a put option, it realizes a gain or loss from the sale of
the underlying security, and the proceeds from such sale are decreased by the
premium originally paid.
The risk associated with purchasing options is limited to the premium originally
paid. The risk in writing a call option is that the Portfolio may forego the
opportunity of profit if the market value of the underlying security or index
increases and the option is exercised. The risk in writing a put option is that
the Portfolio may incur a loss if the market value of the underlying security or
index decreases and the option is exercised. In addition, there is the risk the
Portfolio 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
Portfolio is required to pledge to the broker an amount of cash or securities
equal to the minimum "initial margin" requirements of the exchange on which the
contract is traded. Pursuant to the contract, the Portfolio agrees to receive
from or pay to the broker an amount of cash equal to the daily fluctuation in
value of the contract. Such receipts or payments are known as "variation margin"
and are recorded by the Portfolio as unrealized gains or losses. When the
contract is closed, the Portfolio records a realized gain or loss equal to the
difference between the value of the contract at the time it was opened and the
value at the time it was closed. The potential
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 177
<PAGE>
GLOBAL CONSUMER PRODUCTS AND SERVICES PORTFOLIO
risk to the Portfolio is that the change in value of the underlying securities
may not correlate to the change in value of the contracts. The Portfolio may use
futures contracts to manage its exposure to the stock market and to fluctuations
in currency values or interest rates.
(G) SECURITY TRANSACTIONS AND RELATED INVESTMENT INCOME
Security transactions are accounted for on the trade date (date the order to buy
or sell is executed). The cost of securities sold is determined on a first-in,
first-out basis, unless otherwise specified. Dividends are recorded on the
ex-dividend date. Interest income is recorded on the accrual basis. Where a high
level of uncertainty exists as to its collection, income is recorded net of all
withholding tax with any rebate recorded when received. The Portfolio may trade
securities on other than normal settlement terms. This may increase the risk if
the other party to the transaction fails to deliver and causes the Portfolio to
subsequently invest at less advantageous prices.
(H) PORTFOLIO SECURITIES LOANED
For international securities, cash collateral is received by the Portfolio
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 Portfolio against loaned securities in the amount
at least equal to 102% of the market value of the loaned securities at the
inception of each loan. This collateral must be maintained at not less than 100%
of the market value of the loaned securities during the period of the loan. At
April 30, 1995, there were no securities on loan to brokers.
(I) TAXES
It is the policy of the Portfolio to meet the requirements of the Internal
Revenue Code of 1986, as amended ("Code"). Therefore, no provision has been made
for Federal taxes on income, capital gains, or unrealized appreciation of
securities held.
(J) FOREIGN SECURITIES
There are certain additional considerations and risks associated with investing
in foreign securities and currency transactions that are not inherent in
investments of domestic origin. The Portfolio's investments 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.
In addition, the Portfolio may focus its investments in certain related consumer
products and services industries, subjecting the Portfolio to greater risk than
a fund that is more diversified.
(K) INDEXED SECURITIES
The Portfolio may invest in indexed securities whose value is linked either
directly or indirectly to changes in foreign currencies, interest rates,
equities, indices, or other reference instruments. Indexed securities may be
more volatile than the reference instrument itself, but any loss is limited to
the amount of the original investment.
(L) RESTRICTED SECURITIES
The Portfolio is permitted to invest in privately placed restricted securities.
These securities may be resold in transactions exempt from registration or to
the public if the securities are registered. Disposal of these securities may
involve time-consuming negotiations and expense, and prompt sale at an
acceptable price may be difficult.
2. RELATED PARTIES
G.T. Capital is the Portfolio's investment manager and administrator. The
Portfolio pays investment management and administration fees to G.T. Capital at
the annualized rate of 0.725% on the first $500 million of average daily net
assets of the Portfolio; 0.70% on the next $500 million; 0.675% on the next $500
million; and 0.65% on amounts thereafter. These fees are computed daily and paid
monthly.
The Portfolio pays each of its Trustees who is not an employee, officer or
director of G.T. Capital, G.T. Global Financial Services, Inc. or G.T. Global
Investor Services Inc. $500 per year plus $150 for each meeting of the board or
any committee thereof attended by the Trustees.
At April 30, 1995, all of the shares of beneficial interest of the Portfolio
were owned either by G.T. Global Consumer Products and Services Fund or G.T.
Capital.
3. PURCHASES AND SALES OF SECURITIES
For the period ended April 30, 1995, purchases and sales of investment
securities by the Portfolio, other than short-term investments, aggregated
$2,391,198 and $788,622, respectively. There were no purchases or sales of U.S.
government obligations by the Portfolio for the period ended April 30, 1995.
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 178
<PAGE>
G.T. GLOBAL THEME FUNDS
NOTES
- --------------------------------------------------------------------------------
Statement of Additional Information Page 179
<PAGE>
G.T. GLOBAL THEME FUNDS
NOTES
- --------------------------------------------------------------------------------
Statement of Additional Information Page 180
<PAGE>
G.T. GLOBAL THEME FUNDS
NOTES
- --------------------------------------------------------------------------------
Statement of Additional Information Page 181
<PAGE>
G.T. GLOBAL THEME FUNDS
[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 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 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 FUNDS
G.T. GLOBAL GROWTH & INCOME FUND
Invests in blue-chip stocks and government bonds from around the world
FIXED 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. INVESTMENT FUNDS, INC., G.T. GLOBAL
FINANCIAL SERVICES FUND, GLOBAL FINANCIAL SERVICES PORTFOLIO, G.T. GLOBAL
INFRASTRUCTURE FUND, GLOBAL INFRASTRUCTURE PORTFOLIO, G.T. GLOBAL NATURAL
RESOURCES FUND, GLOBAL NATURAL RESOURCES PORTFOLIO, G.T. GLOBAL CONSUMER
PRODUCTS AND SERVICES FUND, GLOBAL CONSUMER PRODUCTS AND SERVICES PORTFOLIO,
G.T. GLOBAL HEALTH CARE FUND, G.T. GLOBAL TELECOMMUNICATIONS 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 IN SUCH JURISDICTION TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER.
THESA503MC
<PAGE>
[LOGO]
G.T. GLOBAL THEME FUNDS: 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
As Revised June 30, 1995
- --------------------------------------------------------------------------------
This Statement of Additional Information relates to the Advisor Class shares of
G.T. Global Financial Services Fund ("Financial Services Fund"), G.T. Global
Infrastructure Fund ("Infrastructure Fund"), G.T. Global Natural Resources Fund
("Natural Resources Fund"), G.T. Global Consumer Products and Services Fund
("Consumer Products and Services Fund"), G.T. Global Health Care Fund ("Health
Care Fund") and G.T. Global Telecommunications Fund ("Telecommunications Fund")
(individually, "Fund" or "Theme Fund," collectively, "Funds," "Theme Funds").
Each Fund (except for Health Care Fund) is a diversified series of G.T.
Investment Funds, Inc. ("Company"), a registered open-end management investment
company. The Health Care Fund is organized as a non-diversified series of the
Company. The Financial Services Fund, Infrastructure Fund, Natural Resources
Fund and Consumer Products and Services Fund (individually, "Feeder Fund,"
collectively "Feeder Funds,") invest all of their investable assets in the
Global Financial Services Portfolio, Global Infrastructure Portfolio, Global
Natural Resources Portfolio and Global Consumer Products and Services Portfolio
(individually, "Portfolio," collectively, "Portfolios"), respectively. This
Statement of Additional Information, which is not a prospectus, supplements and
should be read in conjunction with the G.T. Global Theme Funds' current Advisor
Class Prospectus dated March 1, 1995, a copy of which is available without
charge by writing to the above address or calling the Funds at the toll-free
telephone number printed above.
G.T. Capital Management, Inc. ("G.T. Capital") serves as the investment manager
of and administrator for the Health Care Fund, Telecommunications Fund and the
Portfolios (each a "Theme Portfolio"), and also serves as the administrator for
each Feeder Fund. The principal underwriter and distributor of the Funds' shares
is G.T. Global Financial Services, Inc. ("G.T. Global"). The Funds' 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................................................................................. 6
Risk Factors............................................................................................................. 14
Investment Limitations................................................................................................... 17
Execution of Portfolio Transactions...................................................................................... 22
Directors and Executive Officers......................................................................................... 24
Management............................................................................................................... 26
Valuation of Fund Shares................................................................................................. 29
Information Relating to Sales and Redemptions............................................................................ 30
Taxes.................................................................................................................... 31
Additional Information................................................................................................... 35
Investment Results....................................................................................................... 36
Description of Debt Ratings.............................................................................................. 67
Financial Statements..................................................................................................... 68
</TABLE>
Statement of Additional Information Page 1
<PAGE>
G.T. GLOBAL THEME FUNDS
INVESTMENT OBJECTIVE
AND POLICIES
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVE
The investment objective of each Feeder Fund is long-term capital growth. The
investment objective of the G.T. Global Health Care Fund and Telecommunications
Fund is long-term capital appreciation and long-term growth of capital,
respectively.
The Financial Services Fund, Infrastructure Fund, Natural Resources Fund and
Consumer Products and Services Fund each seeks to achieve its investment
objective by investing all of its investable assets in the Financial Services
Portfolio, Infrastructure Portfolio, Natural Resources Portfolio and Consumer
Products and Services Portfolio, respectively, each of which is a subtrust (a
"series") of Global Investment Portfolio (an open-end management investment
company) with an investment objective that is identical to that of its
corresponding Fund. Whenever the phrase "all of the Funds' investable assets" is
used herein and in the Prospectus, it means that the only investment securities
that will be held by a Feeder Fund will be that Fund's interest in its
corresponding Portfolio. A Feeder Fund may withdraw its investment in its
corresponding Portfolio at any time, if the Board of Directors of the Company
determines that it is in the best interests of such Fund and its shareholders to
do so. Upon any such withdrawal, a Feeder Fund's assets would be invested in
accordance with the investment policies described below and in the Prospectus
with respect to its corresponding Portfolio.
In analyzing the natural resource industry, G.T. Capital has identified four
areas that it expects will create investment opportunities: (i) improving
supply/demand fundamentals, which may result in higher commodity prices; (ii)
privatization of state-owned natural resource businesses; (iii) management which
can improve production efficiencies without correspondingly increasing commodity
prices; and (iv) service companies with emerging technologies that can enhance
productivity or reduce production costs. Of course, there is no certainty that
these factors will produce the anticipated results.
In analyzing the telecommunications industry, G.T. Capital has identified four
areas that it expects will create investment opportunities: (i) deregulation of
companies in the industry, which will allow competition to promote greater
efficiencies; (ii) privatization of state-owned telecommunications businesses;
(iii) development of infrastructure in underdeveloped countries and upgrading of
services in other countries; and (iv) emerging technologies that will enhance
productivity and reduce costs in the telecommunications industry. Of course,
there is no certainty that these factors will produce the anticipated results.
There may be times when, in the opinion of G.T. Capital, prevailing market,
economic or political conditions warrant reducing the proportion of the Theme
Portfolios' assets invested in equity securities and increasing the proportion
held in cash (U.S. dollars, foreign currencies or multinational currency units)
or invested in debt securities or high quality money market instruments issued
by corporations or the U.S., or a foreign government. A portion of each Theme
Portfolio's assets normally will be held in cash (U.S. dollars, foreign
currencies or multinational currency units) or invested in foreign or domestic
high quality money market instruments pending investment of proceeds from new
sales of Fund Shares to provide for ongoing expenses and redemptions.
SELECTION OF EQUITY INVESTMENTS
For each Theme Portfolio's investment purposes, an issuer is typically
considered as located in a particular country if it is incorporated under the
laws of that country, at least 50% of the value of its assets are located in
that country and it normally derives at least 50% of its income from operations
or sales in that country. However, these are not absolute requirements, and
certain companies incorporated in a particular country and considered by G.T.
Capital to be located in that country may have substantial foreign operations or
subsidiaries and/or export sales exceeding in size the assets or sales in that
country.
In certain countries, governmental restrictions and other limitations on
investment may affect a Theme Portfolio's ability to invest in such countries.
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. G.T. Capital is not
aware at this time of the existence of any investment or exchange control
regulations which might substantially impair the operations of the Theme
Portfolios as described in the Prospectus and this Statement of
Statement of Additional Information Page 2
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G.T. GLOBAL THEME FUNDS
Additional Information. Restrictions may in the future, however, make it
undesirable to invest in certain countries. It should be noted, however, that
this situation could change at any time. None of the Theme Portfolios has a
present intention of making any significant investment in any country or stock
market where the political or economic situation might be considered by G.T.
Capital to threaten a Theme Portfolio with substantial or total loss of its
investment in such country or market.
INVESTMENTS IN OTHER INVESTMENT COMPANIES
Each Theme Portfolio may invest in the securities of investment companies within
the limits of the 1940 Act. These limitations currently provide that, in
general, a Theme Portfolio may purchase shares of an investment company unless
(a) such a purchase would cause a Theme Portfolio to own in the aggregate more
than 3% of the total outstanding voting stock of the investment company or (b)
such a purchase would cause the Theme Portfolio to have more than 5% of its
assets invested in the investment company or more than 10% of its assets
invested in an aggregate of all such investment companies. The foregoing
restrictions do not apply to the investment of the Financial Services Fund,
Infrastructure Fund, Natural Resources Fund and Consumer Products and Services
Fund in their corresponding Portfolios. Investment in closed-end investment
companies may also involve the payment of substantial premiums above the value
of such companies' portfolio securities. Each Theme Portfolio does not intend to
invest in such investment companies 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.
DEPOSITORY RECEIPTS
A Theme Portfolio 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 are typically 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 U.S. securities markets and EDRs
in bearer form are designed for use in European securities markets. For purposes
of each Theme Portfolio's investment policies, a Theme Portfolio's investments
in ADRs, ADSs and EDRs will be deemed to be investments in the equity securities
representing securities of foreign issuers into which they may be converted.
ADR facilities may be established as either "unsponsored" or "sponsored." While
ADRs issued under these two types of facilities are in some respects similar,
there are distinctions between them relating to the rights and obligations of
ADR holders and the practices of market participants. A depository may establish
an unsponsored facility without participation by (or even necessarily the
acquiescence of) the issuer of the deposited securities, although typically the
depository requests a letter of non-objection from such issuer prior to the
establishment of the facility. Holders of unsponsored ADRs generally bear all
the costs of such facilities. The depository usually charges fees upon the
deposit and withdrawal of the deposited securities, the conversion of dividends
into U.S. dollars, the disposition of non-cash distributions, and the
performance of other services. The depository of an unsponsored facility
frequently is under no obligation to distribute shareholder communications
received from the issuer of the deposited securities or to pass-through voting
rights to ADR holders 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
Theme Portfolios may invest in both sponsored and unsponsored ADRs.
WARRANTS OR RIGHTS
Warrants or rights may be acquired by a Theme Portfolio in connection with other
securities or separately and provide the Theme Portfolio with the right to
purchase at a later date other securities of the issuer. As a condition of
continued registration in a state, each Theme Portfolio 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 a Theme Portfolio in
units or attached to securities will be deemed to be without value for purposes
of this restriction.
Statement of Additional Information Page 3
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G.T. GLOBAL THEME FUNDS
LENDING OF PORTFOLIO SECURITIES
For the purpose of realizing additional income, each Theme Portfolio may make
secured loans of its securities holdings amounting to not more than 30% of its
total assets. Securities loans are made to broker/dealers or institutional
investors pursuant to agreements requiring that the loans 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 a
Theme Portfolio's investment policies and by regulatory agencies and approved by
the Portfolios' Board of Trustees or the Company's Board of Directors, as
applicable. The Theme Portfolios may pay reasonable administrative and custodial
fees in connection with the loans of their securities. While the securities loan
is outstanding, a Theme Portfolio 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. A Theme
Portfolio will have a right to call each loan and obtain the securities on five
business days' notice. A Theme Portfolio will not have the right to vote equity
securities while they are being lent, but it may 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 will only 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.
COMMERCIAL BANK OBLIGATIONS
For the purposes of each Theme Portfolio'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 investments in
non-U.S. securities in general, investments in the obligations of foreign
branches of U.S. banks and of foreign banks may subject each Theme Portfolio to
investment risks that are different in some respects from those of investments
in obligations of U.S. issuers. Although each Theme Portfolio will typically
acquire obligations issued and supported by the credit of U.S. or foreign banks
having total assets at the time of purchase of $1 billion or more, this $1
billion figure is not an investment policy or restriction of each Theme
Portfolio. For the purposes of calculation with respect to the $1 billion
figure, the assets of a bank will be deemed to include the assets of its U.S.
and non-U.S. branches.
REPURCHASE AGREEMENTS
Each Theme Portfolio will invest only in repurchase agreements collateralized at
all times in an amount at least equal to the repurchase price plus accrued
interest. To the extent that the proceeds from any sale of such collateral upon
a default in the obligation to repurchase were less than the repurchase price, a
Theme Portfolio 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 a Theme Portfolio's ability to sell the collateral and a Theme
Portfolio could suffer a loss. However, with respect to financial institutions
whose bankruptcy or liquidation proceedings are subject to the U.S. Bankruptcy
Code, each Theme Portfolio intends to comply with provisions under such Code
that would allow the immediate resale of such collateral. Each Theme Portfolio
will not enter into a repurchase agreement with a maturity of more than seven
days if, as a result, more than 15% of the value of its net assets (except for
Health Care Fund, which is more than 10% of the value of its total assets) would
be invested in such repurchase agreements and other illiquid investments.
BORROWING, REVERSE REPURCHASE AGREEMENTS AND "ROLL" TRANSACTIONS
Each Theme Portfolio's borrowings will not exceed 33 1/3% of its total assets,
i.e., the Theme Portfolio's total assets at all times will equal at least 300%
of the amount of outstanding borrowings. If market fluctuations in the value of
a Theme Portfolio's securities holdings or other factors cause the ratio of a
Theme Portfolio's total assets to outstanding borrowings to fall below 300%,
within three days (excluding Sundays and holidays) of such event that Theme
Portfolio may be required to sell portfolio securities to restore the 300% asset
coverage, even though from an investment standpoint such sales might be
disadvantageous. Each Theme Portfolio may also borrow up to 5% of its total
assets for temporary or emergency purposes other than to meet redemptions. Any
borrowing by a Theme Portfolio may cause greater fluctuation in the value of its
shares than would be the case if that Theme Portfolio did not borrow.
Each Theme Portfolio's fundamental investment limitations permit the Theme
Portfolio to borrow money for leveraging purposes. However, each Theme Portfolio
(except the Health Care Fund) is currently prohibited, pursuant to a non-
fundamental investment policy, from borrowing money in order to purchase
securities. Nevertheless, this policy may be changed in the future by the
Company's Board of Directors or the Portfolios' Board of Trustees, as
applicable. In the event that a Theme Portfolio employs leverage in the future,
it would be subject to certain additional risks. Use of leverage creates an
opportunity for greater growth of capital but would exaggerate any increases or
decreases in the net asset value
Statement of Additional Information Page 4
<PAGE>
G.T. GLOBAL THEME FUNDS
of the Financial Services Fund, Infrastructure Fund, Natural Resources Fund,
Consumer Products and Services Fund or a Theme Portfolio. When the income and
gains on securities purchased with the proceeds of borrowings exceed the costs
of such borrowings, a Theme Portfolio's earnings or a Fund's net asset value
will increase faster than otherwise would be the case; conversely, if such
income and gains fail to exceed such costs, a Theme Portfolio's earnings or a
Fund's net asset value would decline faster than would otherwise be the case.
Each Theme Portfolio may enter into reverse repurchase agreements, which involve
the sale of a security by a Theme Portfolio and its agreement to repurchase the
security at a specified time and price. Each Theme Portfolio may also engage in
"roll" transactions, which involve the sale of Government National Mortgage
Association ("GNMA") certificates or other securities together with a commitment
(for which the Theme Portfolio may receive a fee) to purchase similar, but not
identical, securities at a future date. Each Theme Portfolio 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.
SHORT SALES
Each Theme Portfolio (except the Health Care Fund) is authorized to make short
sales of securities. A short sale is a transaction in which a Theme Portfolio
sells a security in anticipation that the market price of that security will
decline. A Theme Portfolio may make short sales (i) as a form of hedging to
offset potential declines in long positions in securities it owns, or
anticipates acquiring, or in similar securities, and (ii) in order to maintain
flexibility in its securities holdings.
When a Theme Portfolio 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 Theme Portfolio 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.
A Theme Portfolio's obligation to replace the borrowed security when the
borrowing is called or expires will be secured by collateral (usually cash, U.S.
government securities or other liquid, high grade debt securities) deposited
with the intermediary. The Theme Portfolio 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 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 that Theme Portfolio on such
security, a Theme Portfolio 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 a Theme Portfolio replaces the borrowed security, that Theme
Portfolio will incur a loss; conversely, if the price declines, the Theme
Portfolio will realize a gain. Any gain will be decreased, and any loss
increased, by the transaction costs associated with the transaction. Although a
Theme Portfolio's gain is limited by the price at which it sold the security
short, its potential loss theoretically is unlimited.
No Theme Portfolio will 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 Theme Portfolio's aggregate short sales of the securities of
any one issuer exceed the lesser of 2% of the Theme Portfolio's net assets or 2%
of the securities of any class of the issuer. Moreover, a Theme Portfolio may
engage in short sales only with respect to securities listed on a national
securities exchange. A Theme Portfolio 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 Theme Portfolio owns the security it has sold short or has the
immediate and unconditional right to acquire at no additional cost the identical
security.
Statement of Additional Information Page 5
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G.T. GLOBAL THEME FUNDS
OPTIONS, FUTURES AND CURRENCY
STRATEGIES
- --------------------------------------------------------------------------------
SPECIAL RISKS OF OPTIONS, FUTURES AND CURRENCY STRATEGIES
The use of options, futures contracts and forward currency contracts ("Forward
Contracts") involves special considerations and risks, as described below. Risks
pertaining to particular instruments are described in the sections that follow.
(1) Successful use of most of these instruments depends upon 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.
(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 instruemtns on indices will depend on the degree of
correlation between price movements in the index and price movements in the
investments being hedged.
(3) Hedging strategies, if successful, can reduce risk of loss by wholly
or partially offsetting the negative effect of unfavorable price movements
in the investments being hedged. However, hedging strategies can also reduce
opportunity for gain by offsetting the positive effect of favorable price
movements in the hedged investments. For example, if a Theme Portfolio
entered into a short hedge because G.T. Capital projected a decline in the
price of a security in the Theme Portfolio'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 Theme Portfolio could suffer a
loss. In either such case, the Theme Portfolio would have been in a better
position had it not hedged at all.
(4) As described below, a Theme Portfolio might be required to maintain
assets as "cover," maintain segregated accounts or make margin payments when
it takes positions in instruments involving obligations to third parties
(i.e., instruments other than purchased options). If the Theme Portfolio
were unable to close out its positions in such instruments, it might be
required to continue to maintain such assets or accounts or make such
payments until the position expired or matured. The requirements might
impair the Theme Portfolio's ability to sell a portfolio security or make an
investment at a time when it would otherwise be favorable to do so, or
require that the Theme Portfolio sell a portfolio security at a
disadvantageous time. The Theme Portfolio's ability to close out a position
in an instrument prior to expiration or maturity depends on the existence of
a liquid secondary market or, in the absence of such a market, the ability
and willingness of the other party to the transaction ("contra party") to
enter into a transaction closing out the position. Therefore, there is no
assurance that any position can be closed out at a time and price that is
favorable to the Theme Portfolio.
WRITING CALL OPTIONS
Each Theme Portfolio 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 Theme Portfolios' 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 Theme Portfolios.
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 an (European style) a certain date (the expiration date). So long as
the obligation of the writer of a call option continues, he or she may be
assigned an exercise notice, requiring him or her to deliver the underlying
security 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.
Statement of Additional Information Page 6
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G.T. GLOBAL THEME FUNDS
Portfolio securities or currencies on which call options may be written will be
purchased solely on the basis of investment considerations consistent with each
Theme Portfolio's investment objective. When writing a call option, a Theme
Portfolio, 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,
a Theme Portfolio has no control over when it may be required to sell the
underlying securities or currencies, since most options may be exercised at any
time prior to the option's expiration. If a call option that a Theme Portfolio
has written expires, the Theme Portfolio will realize a gain in the amount of
the premium; however, such gain may be offset by a decline in the market value
of the underlying security or currency during the option period. If the call
option is exercised, the Theme Portfolio 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. Each Theme Portfolio does not consider a security or
currency covered by a call option to be "pledged" as that term is used in that
Theme Portfolio's policy that limits the pledging or mortgaging of its assets.
Writing call options can serve as a limited short hedge because declines in the
value of the hedged investment would be offset to the extent of the premium
received for writing the option. However, if the security or currency
appreciates to a price higher than the exercise price of the call option, it can
be expected that the option will be exercised and a Theme Portfolio will be
obligated to sell the security or currency at less than its market value.
The premium that a Theme Portfolio receives for writing a call option is deemed
to constitute the market value of an option. The premium the Theme Portfolio
will receive from writing a call option will reflect, among other things, the
current market price of the underlying investment, the relationship of the
exercise price to such market price, the historical price volatility of the
underlying investment, and the length of the option period. In determining
whether a particular call option should be written, 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 a Theme Portfolio to
write another call option on the underlying security or currency with either a
different exercise price or expiration date, or both.
Each Theme Portfolio will pay transaction costs in connection with the writing
of options and in entering into closing purchase contracts. Transaction costs
relating to options activity 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, a Theme Portfolio may purchase an underlying
security or currency for delivery in accordance with the exercise of an option,
rather than delivering such security or currency from its portfolio. In such
cases, additional costs will be incurred.
A Theme Portfolio will realize a profit or loss from a closing purchase
transaction if the cost of the transaction is less or more, respectively, than
the premium received from writing the option. Because increases in the market
price of a call option generally will reflect increases in the market price of
the underlying security 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 a Theme Portfolio.
WRITING PUT OPTIONS
Each Theme Portfolio may write put options on secruties, indices and currencies.
A put option gives the purchaser of the option the right to sell, and the writer
(seller) the obligation to buy, the underlying security or currency at the
exercise price at any time until (American style) or on (European style) the
expiration date. The operation of put options in other respects, including their
related risks and rewards, is substantially identical to that of call options.
A Theme Portfolio generally would write put options in circumstances where G.T.
Capital wishes to purchase the underlying security or currency for a Theme
Portfolio's holdings at a price lower than the current market price of the
security or currency. In such event, a Theme Portfolio would write a put option
at an exercise price that, reduced by the premium received on the option,
reflects the lower price it is willing to pay. Since the Theme Portfolio 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.
Statement of Additional Information Page 7
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G.T. GLOBAL THEME FUNDS
Writing put options can serve as a limited long hedge because increases in the
value of the hedged investment would be offset to the extent of the premium
received for writing the option. However, if the security or currency
depreciates to a price lower than the exercise price of the put option, it can
be expected that the put option will be exercised and a Theme Portfolio will be
obligated to purchase the security or currency at less than its market value.
PURCHASING PUT OPTIONS
Each Theme Portfolio may purchase put options on securities, indices and
currencies. As the holder of a put option, a Theme Portfolio would have the
right to sell the underlying security or currency at the exercise price at any
time until (American style) or on (European style) the expiration date. A Theme
Portfolio may enter into closing sale transactions with respect to such options,
exercise such option or permit such option to expire.
Each Theme Portfolio may purchase a put option on an underlying security or
currency ("protective put") owned by the Theme Portfolio 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
Theme Portfolio, 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.
A Theme Portfolio may also purchase put options at a time when it does not own
the underlying security or currency. By purchasing put options on a security or
currency it does not own, that Theme Portfolio 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 Theme Portfolio will lose its entire investment
in the put option. In order for the purchase of a put option to be profitable,
the market price of the underlying security or currency must decline
sufficiently below the exercise price to cover the premium and transaction
costs, unless the put option is sold in a closing sale transaction.
PURCHASING CALL OPTIONS
Each Theme Portfolio may purchase call options on securities, indices and
currencies. As the holder of a call option, the Theme Portfolio would have the
right to purchase the underlying security or currency at the exercise price at
any time until (American style) or on (European style) the expiration date. A
Theme Portfolio may enter into closing sale transactions with respect to such
options, exercise such options or permit such options to expire.
Call options may be purchased by a Theme Portfolio for the purpose of acquiring
the underlying security or currency for its portfolio. Utilized in this fashion,
the purchase of call options would enable a Theme Portfolio 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 a Theme Portfolio 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 Theme Portfolio 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.
A Theme Portfolio may also 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 Theme Portfolio's
current return. For example, where a Theme Portfolio 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 that Theme Portfolio,
an increase in the market price could result in the exercise of the call option
written by the Theme Portfolio and the realization of a loss on the underlying
security or currency. Accordingly, the Theme Portfolio could purchase a call
option on the same underlying security or currency, which could be exercised to
fulfill the Theme Portfolio's delivery obligations under its written call (if it
is exercised). This strategy could allow the Theme Portfolio to avoid selling
the portfolio security or currency at a time when it has an unrelaized loss;
however, the Theme Portfolio would have to pay a premium to purchase the call
option plus transaction costs.
Aggregate premiums paid for put and call options will not exceed 5% of each
Theme Portfolio's total assets at the time of each purchase.
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G.T. GLOBAL THEME FUNDS
A Theme Portfolio 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 Theme Portfolio as purchaser the right (but not the
obligation) to sell a specified amount of currency at the exercise price at any
time until (American style) or on (European style) the expiration date of the
option. A call option gives the Theme Portfolio as purchaser the right (but not
the obligation) to purchase a specified amount of currency at the exercise price
at any time until (American style) or on (European style) the expiration date of
the option. A Theme Portfolio 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 a Theme Portfolio
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 a Theme
Portfolio anticipates purchasing securities.
Options may be either listed on an exchange or traded over-the-counter ("OTC
options"). Listed options are third-party contracts (I.E., performance of the
obligations of the purchaser and seller is guaranteed by the exchange or
clearing corporation) and have standardized strike prices and expiration dates.
OTC options are two-party contracts with negotiated strike prices and expiration
dates. A Theme Portfolio 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.
The SEC's staff considers purchased OTC options to be illiquid securities. A
Theme Portfolio may also sell OTC options and, in connection therewith,
segregate assets or cover its obligations with respect to OTC options written by
the Theme Portfolio. The assets used as cover for OTC options written by a Theme
Portfolio will be considered illiquid unless the OTC options are sold to
qualified dealers who agree that the Theme Portfolio may repurchase any OTC
option it writes at a maximum price to be calculated by a formula set forth in
the option agreement. The cover for an OTC option written subject to this
procedure would be considered illiquid only to the extent that the maximum
repurchase price under the formula exceeds the intrinsic value of the option.
A Theme Portfolio's ability to establish and close out positions in
exchange-listed options depends on the existence of a liquid market. A Theme
Portfolio 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 a Theme Portfolio will enter into OTC options only with contra
parties that are expected to be capable of entering into closing transactions
with the Theme Portfolio, there is no assurance that the Theme Portfolio will in
fact be able to close out an OTC option position at a favorable price prior to
expiration. In the event of insolvency of the contra party, the Theme Portfolio
might be unable to close out an OTC option position at any time prior to its
expiration.
INDEX OPTIONS
Puts and calls on indices are similar to puts and calls on securities or futures
contracts except that all settlements are in cash and gain or loss depends on
changes in the index in question (and thus on price movements in the securities
market or a particular market sector generally) rather than on price movements
in individual securities or futures contracts. When a Theme Portfolio writes a
call on an index, it receives a premium and agrees that, prior to the expiration
date, the purchaser of the call, upon exercise of the call, will receive from
the Theme Portfolio an amount of cash if the closing level of the index upon
which the call is based is greater than the exercise price of the call. The
amount of cash is equal to the difference between the closing price of the index
and the exercise price of the call times a specified multiple (the
"multiplier"), which determines the total dollar value for each point of such
difference. When a Theme Portfolio buys a call on an index, it pays a premium
and has the same rights as to such call as are indicated above. When a Theme
Portfolio buys a put on an index, it pays a premium and has the right, prior to
the expiration date, to require the seller of the put, upon the Theme
Portfolio's exercise of the put, to deliver to the Theme Portfolio an amount of
cash if the closing level of the index upon which the put is based is less than
the exercise price of the put, which amount of cash is determined by the
multiplier, as described above for calls. When a Theme Portfolio writes a put on
an index, it receives a premium and the purchaser has the right, prior to the
expiration date, to require the Theme Portfolio to deliver to it an amount of
cash equal to the difference between the closing level of the index and the
exercise price times the multiplier, if the closing level is less than the
exercise price.
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G.T. GLOBAL THEME FUNDS
The risks of investment in index options may be greater than options on
securities. Because index options are settled in cash, when a Theme Portfolio
writes a call on an index it cannot provide in advance for its potential
settlement obligations by acquiring and holding the underlying securities. A
Theme Portfolio can offset some of the risk of writing a call index option
position by holding a diversified portfolio of securities similar to those on
which the underlying index is based. However, a Theme Portfolio cannot, as a
practical matter, acquire and hold a portfolio containing exactly the same
securities as underlie the index and, as a result, bears a risk that the value
of the securities held will vary from the value of the index.
Even if a Theme Portfolio could assemble a securities portfolio that exactly
reproduced the composition of the underlying index, it still would not be fully
covered from a risk standpoint because of the "timing risk" inherent in writing
index options. When an index option is exercised, the amount of cash that the
holder is entitled to receive is determined by the difference between the
exercise price and the closing index level on the date when the option is
exercised. As with other kinds of options, the Theme Portfolio as the call
writer will not know that it has been assigned until the next business day at
the earliest. The time lag between exercise and notice of assignment poses no
risk for the writer of a covered call on a specific underlying security, such as
common stock, because there the writer's obligation is to deliver the underlying
security, not to pay its value as of a fixed time in the past. So long as the
writer already owns the underlying security, it can satisfy its settlement
obligations by simply delivering it, and the risk that its value may have
declined since the exercise date is borne by the exercising holder. In contrast,
even if the writer of an index call holds securities that exactly match the
composition of the underlying index, it will not be able to satisfy its
assignment obligations by delivering those securities against payment of the
exercise price. Instead, it will be required to pay cash in an amount based on
the closing index value on the exercise date; and by the time it learns that it
has been assigned, the index may have declined, with a corresponding decline in
the value of its securities portfolio. This "timing risk" is an inherent
limitation on the ability of index call writers to cover their risk exposure by
holding securities positions.
If a Theme Portfolio has purchased an index option and exercises it before the
closing index value for that day is available, it runs the risk that the level
of the underlying index may subsequently change. If such a change causes the
exercised option to fall out-of-the-money, the Theme Portfolio will be required
to pay the difference between the closing index value and the exercise price of
the option (times the applicable multiplier) to the assigned writer.
INTEREST RATE, CURRENCY AND STOCK INDEX FUTURES CONTRACTS
Each Theme Portfolio 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 price levels in order to
establish more definitely the effective return on securities or currencies held
or intended to be acquired by the Theme Portfolio. A Theme Portfolio's hedging
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 or stock
prices.
Each Theme Portfolio only will enter into Futures Contracts that are traded on
futures exchanges and are standardized as to maturity date and underlying
financial instrument thereon in the United States. 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 a Theme Portfolio's exposure to interest rate, currency exchange
rate and stock market fluctuations, that Theme Portfolio may be able to hedge
its exposure more effectively and at a lower cost through using Futures
Contracts.
A Futures Contract provides for the future sale by one party and purchase by
another party of a specified amount of a specific financial instrument (security
or currency) for a specified price at a designated date, time and place. A stock
index Futures Contract provides for the delivery, at a designated date, time and
place, of an amount of cash equal to a specified dollar amount times the
difference between the stock index value at the close of trading on the contract
and the price at which the Futures Contract is originally struck; no physical
delivery of stocks comprising the index is made. Brokerage fees are incurred
when a Futures Contract is bought or sold, and margin deposits must be
maintained at all times the Futures Contract is outstanding.
Although Futures Contracts typically require future delivery of and payment for
financial instruments or currencies, Futures Contracts usually are closed out
before the delivery date. Closing out an open Futures Contract sale or purchase
is effected by entering into an offsetting Futures Contract purchase or sale,
respectively, for the same aggregate amount of the identical financial
instrument or currency and the same delivery date. If the offsetting purchase
price is less than the
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G.T. GLOBAL THEME FUNDS
original sale price, the Theme Portfolio realizes a gain; if it is more, the
Theme Portfolio realizes a loss. Conversely, if the offsetting sale price is
more than the original purchase price, the Theme Portfolio realizes a gain; if
it is less, the Theme Portfolio realizes a loss. The transaction costs must also
be included in these calculations. There can be no assurance, however, that a
Theme Portfolio will be able to enter into an offsetting transaction with
respect to a particular Futures Contract at a particular time. If a Theme
Portfolio is not able to enter into an offsetting transaction, that Theme
Portfolio will continue to be required to maintain the margin deposits on the
Futures Contract.
As an example of an offsetting transaction, the contractual obligations arising
from the sale of one 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 Theme
Portfolio.
Each Theme Portfolio's Futures transactions will be entered into for hedging
purposes; that is, Futures Contracts will be sold to protect against a decline
in the price of securities or currencies that a Theme Portfolio owns, or Futures
Contracts will be purchased to protect the Theme Portfolio against an increase
in the price of securities or currencies it has committed to purchase or expects
to purchase.
"Margin" with respect to Futures Contracts is the amount of funds that must be
deposited by a Theme Portfolio in order to initiate Futures trading and maintain
the Theme Portfolio's open positions in Futures Contracts. A margin deposit made
when the Futures Contract is entered into ("initial margin") is intended to
ensure the Theme Portfolio's performance under the Futures Contract. The margin
required for a particular Futures Contract is set by the exchange on which the
Futures Contract is traded and may be significantly modified from time to time
by the exchange during the term of the Futures Contract.
Subsequent payments, called "variation margin" to and from the futures
commission merchant through which the Theme Portfolio entered in the Futures
Contract will be made on a daily basis as the price of the underlying security,
currency or index fluctuates making the Futures Contract more or less valuable,
a process known as marking-to-market.
RISKS OF USING FUTURES CONTRACTS. The prices of Futures Contracts are
volatile and are influenced by, among other things, actual and anticipated
changes in interest 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 a Theme Portfolio's
portfolio being hedged. The degree of imperfection of correlation depends upon
circumstances such as variations in speculative market demand for Futures and
for securities 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.
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G.T. GLOBAL THEME FUNDS
If a Theme Protfolio 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 Theme Portfolio would
continue to be subject to market risk with respect to the position. In addition,
except in the case of purchased options, the Theme Portfolio would continue to
be required to make daily variation margin payments and might be required to
maintain the position being hedged by the Future or option or to maintain cash
or securities in a segregated account.
Certain characteristics of the Futures market might increase the risk that
movements in the prices of Futures Contracts or options on Futures might not
correlate perfectly with movements in the prices of the investments being
hedged. For example, all participants in the Futures and options on Futures
markets are subject to daily variation margin calls and might be compelled to
liquidate Futures or options on Futures positions whose prices are moving
unfavorably to avoid being subject to further calls. These liquidations could
increase price volatility of the instruments and distort the normal price
relationship between the Futures or options and the investments being hedged.
Also, because initial margin deposit requirements in the Futures market are less
onerous than margin requirements in the securities markets, there might be
increased participation by speculators in the Futures markets. This
participation also might cause temporary price distortions. In addition,
activities of large traders in both the Futures and securities markets involving
arbitrage, "program trading" and other investment strategies might result in
temporary price distortions.
OPTIONS ON FUTURES CONTRACTS
Options on Futures Contracts are similar to options on securities or currencies
except that options on Futures Contracts give the purchaser the right, in return
for the premium paid, to assume a position in a Futures Contract (a long
position if the option is a call and a short position if the option is a put) at
a specified exercise price at any time during the period of the option. Upon
exercise of the option, the delivery of the Futures position by the writer of
the option to the holder of the option will be accompanied by delivery of the
accumulated balance in the writer's Futures margin account, which represents the
amount by which the market price of the Futures Contract, at exercise, exceeds
(in the case of a call) or is less than (in the case of a put) the exercise
price of the option on the Futures Contract. If an option is exercised on the
last trading day prior to the expiration date of the option, the settlement will
be made entirely in cash equal to the difference between the exercise price of
the option and the closing level of the securities, currencies or index upon
which the Futures Contract is based on the expiration date. Purchasers of
options who fail to exercise their options prior to the exercise date suffer a
loss of the premium paid.
The purchase of call options on Futures can serve as a long hedge, and the
purchase of put options on Futures can serve as a short hedge. Writing call
options on Futures can serve as a limited short hedge, and writing put options
on Futures can serve as a limited long hedge, using a strategy similar to that
used for writing options on securities, foreign currencies or indices.
If a Theme Portfolio writes an option on a Futures Contract, it will be required
to deposit initial and variation margin pursuant to requirements similar to
those applicable to Futures Contracts. Premiums received from the writing on an
option on a Futures Contract are included in the initial margin deposit.
A Theme Portfolio may seek to close out an option position by selling an option
covering the same Futures Contract and having the same exercise price and
expiration date. The ability to establish and close out positions on such
options is subject to the maintenance of a liquid secondary market.
LIMITATIONS ON USE OF FUTURES, OPTIONS ON FUTURES AND CERTAIN OPTIONS ON
CURRENCIES
To the extent that a Theme Portfolio 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 Theme Portfolio portfolio, after
taking into account unrealized profits and unrealized losses on any contracts
the Theme Portfolio has entered into. In general, a call option on a Futures
Contract is "in-the-money" if the value of the underlying Futures Contract
exceeds the strike, I.E., exercise, price of the call; a put option on a Futures
Contract is "in-the-money" if the value of the underlying Futures Contract is
exceeded by the strike price of the put. This guideline may be modified by the
Company's Board of Directors and the Portfolios' Board of Trustees, as
applicable, without a shareholder vote. This limitation does not limit the
percentage of a Theme Portfolio'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. A Theme Portfolio
either may
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G.T. GLOBAL THEME FUNDS
accept or make delivery of the currency at the maturity of the Forward Contract.
A Theme Portfolio may also, if its contra party agrees, prior to maturity, enter
into a closing transaction involving the purchase or sale of an offsetting
contract.
A Theme Portfolio engages in forward currency transactions in anticipation of,
or to protect itself against, fluctuations in exchange rates. A Theme Portfolio
might sell a particular foreign currency forward, for example, when it holds
bonds denominated in a foreign currency but anticipates, and seeks to be
protected against, a decline in the currency against the U.S. dollar. Similarly,
a Theme Portfolio might sell the U.S. dollar forward when it holds bonds
denominated in U.S. dollars but anticipates, and seeks to be protected against,
a decline in the U.S. dollar relative to other currencies. Further, a Theme
Portfolio might purchase a currency forward to "lock in" the price of securities
denominated in that currency that it anticipates purchasing.
Forward Contracts are traded in the interbank market conducted directly between
currency traders (usually large commercial banks) and their customers. A Forward
Contract generally has no deposit requirement, and no commissions are charged at
any stage for trades. Each Theme Portfolio 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 Theme Portfolios' Board of Trustees
or the Company's Board of Directors, as applicable.
A Theme Portfolio may enter into Forward Contracts either with respect to
specific transactions or with respect to overall investments of that Theme
Portfolio. The precise matching of the Forward Contract amounts and the value of
specific securities generally will not be possible because the future value of
such securities in foreign currencies will change as a consequence of market
movements in the value of those securities between the date the Forward Contract
is entered into and the date it matures. Accordingly, it may be necessary for
that Theme Portfolio 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 Theme Portfolio 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 Theme Portfolio is obligated to
deliver. The projection of short-term currency market movements is extremely
difficult, and the successful execution of a short-term hedging strategy is
highly uncertain. Forward Contracts involve the risk that anticipated currency
movements will not be predicted accurately, causing a Theme Portfolio to sustain
losses on these contracts and transaction costs.
At or before the maturity of a Forward Contract requiring a Theme Portfolio to
sell a currency, that Theme Portfolio either may sell a 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 Theme Portfolio will obtain, on the same maturity
date, the same amount of the currency that it is obligated to deliver.
Similarly, a Theme Portfolio 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. A Theme Portfolio would realize a gain or
loss as a result of entering into such an offsetting Forward Contract under
either circumstance to the extent the exchange rate or rates between the
currencies involved moved between the execution dates of the first contract and
the offsetting contract.
The cost to a Theme Portfolio 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 a Theme Portfolio 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
A Theme Portfolio 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
Theme Portfolio's securities are denominated. Such currency hedges can protect
against price movements in a security that the Theme Portfolio owns or intends
to acquire that are attributable to changes in the value of the currency in
which it is denominated. Such hedges do not, however, protect against price
movements in the securities that are attributable to other causes.
A Theme Portfolio 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 Theme Portfolio 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
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G.T. GLOBAL THEME FUNDS
correlation to the value of the currency being hedged. The risk that movements
in the price of the contract will not correlate perfectly with movements in the
price of the currency being hedged is magnified when this strategy is used.
The value of Futures Contracts, options on Futures Contracts, Forward Contracts
and options on foreign currencies depends on the value of the underlying
currency relative to the U.S. dollar. Because foreign currency transactions
occurring in the interbank market might involve substantially larger amounts
than those involved in the use of Futures Contracts, Forward Contracts or
options, a Theme Portfolio could be disadvantaged by dealing in the odd lot
market (generally consisting of transactions of less than $1 million) for the
underlying foreign currencies at prices that are less favorable than for round
lots.
There is no systematic reporting of last sale information for foreign currencies
or any regulatory requirements that quotations available through dealers or
other market sources be firm or revised on a timely basis. Quotation information
generally is representative of very large transactions in the interbank market
and thus might not reflect odd-lot transactions where rates might be less
favorable. The interbank market in foreign currencies is a global,
round-the-clock market. To the extent the U.S. options or Futures markets are
closed while the markets for the underlying currencies remain open, significant
price and rate movements might take place in the underlying markets that cannot
be reflected in the markets for the Futures contracts or options until they
reopen.
Settlement of Futures Contracts, Forward Contracts and options involving foreign
currencies might be required to take place within the country issuing the
underlying currency. Thus, a Theme Portfolio might be required to accept or make
delivery of the underlying foreign currency in accordance with any U.S. or
foreign regulations regarding the maintenance of foreign banking arrangements by
U.S. residents and might be required to pay any fees, taxes and charges
associated with such delivery assessed in the issuing country.
COVER
Transactions using Forward Contracts, Futures Contracts and options (other than
options that a Theme Portfolio has purchased) expose the Theme Portfolio to an
obligation to another party. A Theme Portfolio 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 Future Contracts,
or (2) cash, receivables and short-term debt securities with a value sufficient
at all times to cover its potential obligations not covered as provided in (1)
above. Each Theme Portfolio 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 a Theme Portfolio's assets are used for cover or segragated accounts, it
could affect portfolio management or the Theme Portfolio's ability to meet
redemption requests or other current obligations.
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RISK FACTORS
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CONCENTRATION. Each Theme Portfolio concentrates its investments in the
securities of companies in the industries of its particular sector. As a result,
factors specifically affecting those industries, such as substantial government
regulation, interest rate movements, and increased competition, may have a
greater affect on the value of that Theme Portfolio's shares than on those of an
investment company that does not concentrate its investments in such industries.
In addition, as a result of each Theme Portfolio's ability to invest in
companies in its sector industries throughout the world, each Theme Portfolio is
subject to risks relating to the different and rapidly evolving regulatory
environments for companies in foreign markets.
ILLIQUID SECURITIES. Each Theme Portfolio may invest up to 15% of its net
assets (except for the Health Care Fund, which may invest up to 10% of its total
assets) in illiquid securities. Securities may be considered illiquid if a Theme
Portfolio cannot reasonably expect within seven days to sell the security for
approximately the amount at which that Theme Portfolio values such securities.
See "Investment Limitations." The sale of illiquid securities, if they can be
sold at all, generally will require more time and result in higher brokerage
charges or dealer discounts and other selling expenses than will the sale of
liquid
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G.T. GLOBAL THEME FUNDS
securities such as securities eligible for trading on U.S. securities exchanges
or in OTC markets. Moreover, restricted securities, which may be illiquid for
purposes of this limitation, often sell, if at all, at a price lower than
similar securities that are not subject to restrictions on resale.
With respect to liquidity determinations generally, the Portfolios' Board of
Trustees or the Company's Board of Directors, as applicable, 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. Each Board has delegated the function of making day-to-day
determinations of liquidity to G.T. Capital, in accordance with procedures
approved by that Board. 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 that 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 held by each Theme Portfolio and
periodically reports such determinations to the Portfolios' Board of Trustees or
the Company's Board of Directors, as applicable.
POLITICAL, SOCIAL AND ECONOMIC RISKS. Investing in securities of non-U.S.
companies may entail additional risks due to the potential political, social and
economic instability of certain countries and the risks of expropriation,
nationalization, confiscation or the imposition of restrictions on foreign
investment convertibility of currencies into U.S. dollars and on repatriation of
capital invested. In the event of such expropriation, nationalization or other
confiscation by any country, a Theme Portfolio could lose its entire investment
in any such country.
RELIGIOUS, POLITICAL AND ETHNIC INSTABILITY. Certain countries in which a
Theme Portfolio 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 a Theme Portfolio'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
extraconstitutional means; (ii) popular unrest associated with demands for
improved political, economic and social conditions; and (iii) hostile relations
with neighboring or other countries. Such political, social and economic
instability could disrupt the principal financial markets in which a Theme
Portfolio invests and adversely affect the value of a Theme Portfolio's assets.
FOREIGN INVESTMENT RESTRICTIONS. Certain countries prohibit or impose
substantial restrictions on investments in their capital markets, particularly
their equity markets, by foreign entities such as a Theme Portfolio. These
restrictions or controls may at times limit or preclude investment in certain
securities and may increase the cost and expense of a Theme Portfolio. For
example, certain countries require prior governmental approval before
investments by foreign persons may be made, or may limit the amount of
investment by foreign persons in a particular company or limit the investment by
foreign persons to only a specific class of securities of a company that may
have less advantageous terms than securities of the company available for
purchase by nationals. Moreover, the national policies of certain countries may
restrict investment opportunities in issuers or industries deemed sensitive to
national interests. In addition, some countries require governmental approval
for the repatriation of investment income, capital or the proceeds of securities
sales by foreign investors. In addition, if there is a deteriation in a
country's balance of payments of for other reasons, a country may impose
restrictions on foreign capital remittances abroad. A Theme Portfolio could be
adversely affected by delays in, or a refusal to grant, any required
governmental approval for repatriation, as well as by the application to it of
other restrictions on investments.
NON-UNIFORM CORPORATE DISCLOSURE STANDARDS AND GOVERNMENTAL
REGULATION. Foreign companies are subject to accounting, auditing and financial
standards and requirements that differ, in some cases significantly, from those
applicable to U.S. companies. In particular, the assets, liabilities and profits
appearing on the financial statements of such a company may not reflect its
financial position or results of operations in the way they would be reflected
had such financial statements been prepared in accordance with U.S. generally
accepted accounting principles. Most of the securities held by a Theme Portfolio
will not be registered with the SEC or regulators of any foreign country, nor
will the issuers thereof be subject to the SEC's reporting requirements. Thus,
there will be less available information concerning most foreign issuers of
securities held by a Theme Portfolio 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.
Statement of Additional Information Page 15
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G.T. GLOBAL THEME FUNDS
Issuers of securities in foreign jurisdictions are generally not subject to the
same degree of regulation as are U.S. issuers with respect to such matters as
restrictions on market manipulation, insider trading rules, shareholder proxy
requirements and timely disclosure of information.
CURRENCY FLUCTUATIONS. Because each Theme Portfolio, 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 a Theme Portfolio'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 that Theme Portfolio's holdings of securities and cash
denominated in such currency and, therefore, will cause an overall decline in
the appropriate 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 that Fund. Moreover, if the value of the foreign currencies in
which a Theme Portfolio receives its income falls relative to the U.S. dollar
between receipt of the income and the making of Fund distributions, the Theme
Portfolio may be required to liquidate securities in order to make distributions
if the Theme Portfolio 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 the pace of business activity in the other countries and the
United States, and other economic and financial conditions affecting the world
economy.
Although each Theme Portfolio values its assets daily in terms of U.S. dollars,
the Portfolios do not intend to convert their holdings of foreign currencies
into U.S. dollars on a daily basis. Each Portfolio will do so, from time to
time, and investors should be aware of the costs of currency conversion.
Although foreign exchange dealers do not charge a fee for conversion, they do
realize a profit based on the difference ("spread") between the prices at which
they buy and sell various currencies. Thus, a dealer may offer to sell a foreign
currency to a Portfolio at one rate, while offering a lesser rate of exchange
should a Portfolio desire to sell the currency to the dealer.
ADVERSE MARKET CHARACTERISTICS. Securities of many foreign issuers may be
less liquid and their prices more volatile than securities of comparable U.S.
issuers. In addition, foreign securities markets and brokers generally are
subject to less governmental supervision and regulation than in the United
States, and foreign securities transactions usually are subject to fixed
commissions, which generally are 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 Theme Portfolio
are uninvested and no return is earned thereon. The inability of a Theme
Portfolio to make intended security purchases due to settlement problems could
cause that Theme Portfolio to miss attractive investment opportunities.
Inability to dispose of a portfolio security due to settlement problems either
could result in losses to that Theme Portfolio due to subsequent declines in
value of the portfolio security or, if that Theme Portfolio 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 a Theme Portfolio's assets, although G.T. Capital does not believe
that such difficulties will have a material adverse effect on a Theme
Portfolio's portfolio trading activities.
Each Theme Portfolio may use foreign custodians, which may involve risks in
addition to those related to its use of U.S. custodians. Such risks include
uncertainties relating to determining and monitoring the foreign custodian's
financial strength, reputation and standing; maintaining appropriate safeguards
concerning that Theme Portfolio's investments; and possible difficulties in
obtaining and enforcing judgments against such custodians.
WITHHOLDING TAXES. Each Theme Portfolio's net investment income from foreign
issuers may be subject to withholding taxes by the foreign issuer's country,
thereby reducing that Theme Portfolio's net investment income or delaying the
receipt of income where those taxes may be recaptured. See "Taxes."
SPECIAL CONSIDERATIONS AFFECTING EUROPE. The countries that are members of
the European Economic Community ("Common Market") (Belgium, Denmark, France,
Greece, Ireland, Italy, Luxembourg, Netherlands, Portugal, Spain, the United
Kingdom and Germany) eliminated certain import tariffs and quotas and other
trade barriers with respect to one another over the past several years. G.T.
Capital believes that this deregulation should improve the prospects for
economic growth in many European countries. Among other things, the deregulation
could enable companies domiciled in one country to avail themselves of lower
labor costs existing in other countries. In addition, this deregulation could
benefit companies domiciled in one country by opening additional markets for
their goods and services in other countries. Since, however, it is not clear at
this time what the exact form or effect of these Common Market reforms will be
on business in
Statement of Additional Information Page 16
<PAGE>
G.T. GLOBAL THEME FUNDS
Western Europe or the emerging European markets, it is impossible to predict the
long-term impact of the implementation of these programs on the securities owned
by a Theme Portfolio.
SPECIAL CONSIDERATIONS AFFECTING JAPAN AND HONG KONG. The concentration of
investments by a Theme Portfolio in Japan means that that Portfolio may be more
volatile than a fund that is broadly diversified geographically. Overseas trade
is important to Japan's economy. Japan has few natural resources and must export
to pay for its imports of these basic requirements. Because of the concentration
of Japanese exports in highly visible products, Japan has had difficult
relations with its trading partners, particularly the United States, where the
trade imbalance is the greatest. It is possible that trade sanctions or other
protectionist measures could impact Japan adversely in both the short and the
long term. The Japanese securities markets are less regulated than those in the
United States. Evidence has emerged from time to time of distortion of market
prices to serve political or other purposes. Shareholders' rights are not always
equally enforced.
Hong Kong is a British colony which will transfer sovereignty to the Peoples
Republic of China in 1997. China has espoused policies antagonistic to free
enterprise capitalism and democracy. There can be no guarantee that property
rights will continue to be safeguarded in Hong Kong after 1997, although
recently China has moved toward free enterprise, and has established stock
exchanges of its own.
SPECIAL CONSIDERATIONS AFFECTIVE EMERGING MARKETS. 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 capital invested. In the event of such
expropriation, nationalization or other confiscation by any country, a Theme
Portfolio could lose its entire investment in any such country.
Emerging securities markets are substantially smaller, less developed, less
liquid and more volatile than the major securities markets. The limited size of
emerging securities markets and limited trading 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 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 economics and securities
markets of certain Latin American countries.
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INVESTMENT LIMITATIONS
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FEEDER FUNDS
The Financial Services Fund, Infrastructure Fund, Natural Resources Fund and
Consumer Products and Services Fund each has the following fundamental
investment policy to enable it to invest in the Financial Services Portfolio,
Infrastructure Portfolio, Natural Resources Portfolio and Consumer Products and
Services Portfolio respectively:
Notwithstanding any other investment policy of the Fund, the Fund may invest all
of its investable assets (cash, securities and receivables related to
securities) in an open-end management investment company having substantially
the same investment objective, policies and limitations as the Fund.
Statement of Additional Information Page 17
<PAGE>
G.T. GLOBAL THEME FUNDS
All other fundamental investment policies, and the non-fundamental policies, of
each Feeder Fund and its corresponding Portfolio are identical. Therefore,
although the following discusses the investment policies of each Portfolio and
its Board of Trustees, it applies equally to each Feeder Resources Fund and
Consumer Products and Services Fund and their Board of Directors.
Each Portfolio 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 that Portfolio's shares represented at a
meeting at which more than 50% of the outstanding shares are represented, or
(ii) more than 50% of the outstanding shares. Whenever a Feeder Fund is
requested to vote on a change in the investment limitations of its corresponding
Portfolio, that Fund will hold a meeting of its shareholders and will cast its
votes as instructed by its shareholders.
Each Portfolio may not:
(1) Buy or sell real estate (including real estate limited
partnerships); however, each Portfolio 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;
(2) Buy or sell commodities or commodity contracts, except that each
Portfolio may purchase and sell financial and currency futures contracts and
options thereon, and may purchase and sell currency forward contracts,
options on foreign currencies and may otherwise engage in other transactions
in foreign currencies;
(3) Underwrite securities of other issuers, except to the extent that
the disposition 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 each Portfolio may purchase debt securities
and enter into repurchase agreements and may make loans of portfolio
securities;
(5) Purchase securities on margin, provided that each Portfolio 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 not in excess of 33 1/3 of the value
of each Portfolio's total assets, (including the amount borrowed), less all
liabilities and indebtedness (other than the borrowing). This restriction
shall not prevent any Portfolio from entering into reverse repurchase
agreements, provided that reverse repurchase agreements, and any other
transactions constituting borrowing by a Portfolio may not exceed one-third
of that Portfolio's total assets. Transactions involving options, futures
contracts, options on futures contracts and forward currency contracts, as
described in the Prospectus and Statement of Additional Information, and
collateral arrangements relating thereto will not be deemed to be
borrowings;
(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; or
(8) Invest in direct interests or leases in oil, gas, or other mineral
exploration or development programs; however, each Portfolio may invest in
the securities of companies that engage in these activities.
In addition, each Portfolio has adopted as a fundamental investment policy a
classification as a "diversified" portfolio under the 1940 Act. This means that,
with respect to 75% of the Portfolio's total assets, no more than 5% will be
invested in the securities of any one issuer, and the Portfolio will purchase no
more than 10% of the outstanding voting securities of any one issuer. This
policy cannot be changed without approval by the holders of a majority of the
Portfolio's outstanding voting securities as defined above and in the
Prospectus.
The following investment policies of each Portfolio are not fundamental policies
and may be changed by vote of the Portfolios' Board of Trustees without
shareholder approval. No Portfolio may:
(1) Invest in securities of an issuer if the investment would cause the
Portfolio 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 15% of its net assets in illiquid securities,
including securities that are illiquid by virtue of the absence of a readily
available market;
Statement of Additional Information Page 18
<PAGE>
G.T. GLOBAL THEME FUNDS
(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 Trustees of the Portfolio, the Portfolio'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;
(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 Portfolio's portfolio, after taking into
account unrealized profits and unrealized losses on any contract the
Portfolio has entered into;
(7) Borrow money except for temporary or emergency purposes (not for
leveraging) in excess of 33 1/3% of the value of the Portfolio's total
assets (while borrowings exceed 5% of the Infrastructure Portfolio's and
Natural Resources Portfolio's total assets, such Portfolio will not make any
additional investments); and
(8) Invest more than 10% of its total assets in shares of other
investment companies and 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 investment objective of each Feeder Fund, which may not be changed without
the approval of Fund shareholders, and their corresponding Portfolios'
investment objective, which may be changed without the approval of its
shareholders, and other investment policies, techniques and limitations, which
may or may not be changed without shareholder approval.
HEALTH CARE FUND
The Health Care 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 Health Care Fund's
shares represented at a meeting at which more than 50% of the outstanding shares
are represented, or (ii) more than 50% of the outstanding shares.
The Health Care Fund may not:
(1) Invest more than 10% of its total assets in securities which cannot
be readily resold to the public because of legal or contractual restrictions
or for which no readily available market exists, which for this purpose
includes repurchase agreements maturing in more than seven days;
(2) Invest in companies for the purpose of exercising control or
management;
(3) Purchase or sell real estate; provided that the Health Care Fund may
invest in securities secured by real estate or interests therein or issued
by companies that invest in real estate or interests therein;
(4) Purchase securities on margin or make short sales, except for
short-term credits necessary for clearance of portfolio transactions, and
except that the Health Care Fund may make short sales and maintain short
positions and may make margin deposits in connection with its use of
options, futures contracts and options on futures contracts;
(5) Underwrite securities of other issuers, except to the extent that,
in connection with the disposition of portfolio securities, the Health Care
Fund may be deemed to be an underwriter under federal securities laws;
(6) Make loans, except through loans of portfolio securities as
authorized by the Health Care Fund's Prospectus and except through
repurchase agreements, provided that for purposes of this limitation the
acquisition of portfolio securities consistent with the Health Care Fund's
investment objective and policies shall not be deemed to be the making of a
loan;
(7) Purchase or sell commodities or commodity contracts, except that
consistent with the Health Care Fund's investment objective and policies the
Health Care Fund may use financial and currency futures instruments and
options thereon for hedging purposes;
(8) Issue senior securities, except that for purposes of this limitation
the Health Care Fund may borrow money in such amounts and in such fashion as
is permitted under the 1940 Act and the rules thereunder;
Statement of Additional Information Page 19
<PAGE>
G.T. GLOBAL THEME FUNDS
(9) Mortgage, pledge or hypothecate or in any manner transfer, as
security for indebtedness, any securities owned or held by the Health Care
Fund, except as may be necessary in connection with permitted borrowings;
provided, however, that this does not prohibit escrow, collateral or margin
arrangements in connection with the Health Care Fund's use of options,
futures contracts and options on futures contracts;
(10) Invest in oil, gas or mineral-related programs or leases; or
(11) Purchase any security if as a result more than 5% of the Health Care
Fund's total assets would be invested in securities of companies which
together with any predecessors have been in operation for less than three
years.
An additional investment policy of the Health Care Fund, which may be changed by
vote of the Company's Board of Directors without shareholder approval, provides
that the Health Care Fund will not invest in securities of an issuer if the
investment would cause the Health Care Fund to own more than 10% of any class of
securities of any one issuer. Although it intends to do so only infrequently, if
at all, the Health Care Fund has the authority to invest up to 10% of its total
assets in shares of other investment companies. The Health Care 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 Health Care 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.
TELECOMMUNICATIONS FUND
The Telecommunications 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 Telecommunications
Fund's shares represented at a meeting at which more than 50% of the outstanding
shares are represented, or (ii) more than 50% of the outstanding shares.
The Telecommunications Fund may not:
(1) Buy or sell real estate (including real estate limited
partnerships); however, the Telecommunications 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;
(2) Purchase or sell commodities or commodity contracts, except that the
Telecommunications Fund may purchase and sell financial and currency futures
contracts and options thereon, and may purchase and sell currency forward
contracts, options on foreign currencies and may otherwise engage in other
transactions in foreign currencies;
(3) Engage in the business of underwriting securities of other issuers,
except to the extent that the disposition 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 Telecommunications 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 Telecommunications
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 not in excess of 33 1/3% of the value
of the Telecommunications Fund's total assets, including the amount
borrowed, less all liabilities and indebtedness (other than the borrowing).
This restriction shall not prevent the Telecommunications Fund from entering
into reverse repurchase agreements, provided that reverse repurchase
agreements, and any other transactions constituting borrowing by the
Telecommunications Fund may not exceed one-third of the Telecommunications
Fund's total assets. Transactions involving options, futures contracts,
options on futures contracts and forward currency contracts, as described in
the Prospectus and Statement of Additional Information, and collateral
arrangements relating thereto will not be deemed to be borrowings;
(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; or
Statement of Additional Information Page 20
<PAGE>
G.T. GLOBAL THEME FUNDS
(8) Invest in direct interests or leases in oil, gas, or other mineral
exploration or development programs; however, the Telecommunications Fund
may invest in the securities of companies that engage in these activities.
In addition, the Telecommunications Fund has adopted as a fundamental investment
policy the classification as a "diversified" fund under the 1940 Act which means
that, with respect to 75% of the Telecommunications Fund's total assets, no more
than 5% will be invested in the securities of any one issuer, and the
Telecommunications Fund will purchase no more than 10% of the outstanding voting
securities of any one issuer. This policy cannot be changed without approval by
the holders of a majority of the Telecommunications Fund's outstanding voting
securities as defined above and in the Prospectus.
The following operating policies of the Telecommunications Fund are not
fundamental policies and may be changed by vote of the Company's Board of
Directors without shareholder approval. The Telecommunications Fund may not:
(1) Invest in securities of an issuer if the investment would cause the
Telecommunications 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 15% of its net 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 Telecommunications 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;
(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; or
(7) Borrow money except for temporary or emergency purposes (not for
leveraging) not in excess of 33 1/3% of the value of the Telecommunications
Fund's total assets. While borrowings exceed 5% of the Telecommunications
Fund's total assets, the Telecommunications Fund will not make any
additional investments.
The Telecommunications Fund has the authority to invest up to 10% of its total
assets in shares of other investment companies, and in real estate investment
trusts. The Telecommunications 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 Telecommunications Fund's investment objective, which may not be changed
without the approval of shareholders, and other investment policies, techniques
and limitations, which may be changed without shareholder approval.
------------------------
If a percentage restriction on investment or utilization of assets in an
investment policy or restriction is adhered to at the time an investment is
made, a later change in percentage ownership of a security or kind of securities
resulting from changing market values or a similar type of event will not be
considered a violation of a Fund's or Portfolio's investment policies or
restrictions. A Fund or Portfolio may exchange securities, exercise conversion
or subscription rights, warrants or other rights to purchase common stock or
other equity securities and may hold, except to the extent limited by the 1940
Act, any such securities so acquired without regard to the Fund's or Portfolio's
investment policies and restrictions. The original cost of the securities so
acquired will be included in any subsequent determination of a Fund's or
Portfolio's compliance with the investment percentage limitations referred to
above and in the Prospectus.
Statement of Additional Information Page 21
<PAGE>
G.T. GLOBAL THEME FUNDS
EXECUTION OF PORTFOLIO
TRANSACTIONS
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Subject to policies established by the Company's Board of Directors and the
Portfolios' Board of Trustees, G.T. Capital is responsible for the execution of
each Theme Portfolio's securities transactions and the selection of
broker/dealers who execute such transactions on behalf of each Theme Portfolio.
In executing portfolio transactions, G.T. Capital seeks the best net results for
each Theme Portfolio, taking into account such factors as the price (including
the applicable brokerage commission or dealer spread), size of the order,
difficulty of execution and operational facilities of the firm involved.
Although 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 each Theme Portfolio may engage in
soft dollar arrangements for research services, as described below, each Theme
Portfolio 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 each Theme Portfolio, G.T. Capital may select
broker/dealers to execute that Theme Portfolio's portfolio transaction on the
basis of the research and brokerage services they provide to G.T. Capital for
its use in managing that Theme Portfolio and its other advisory accounts. Such
services may include furnishing analyses, reports and information concerning
issuers, industries, securities, geographic regions, economic factors and
trends, portfolio strategy, and performance of accounts; and effecting
securities transactions and performing functions incidental thereto (such as
clearance and settlement). Research and brokerage services received from such
broker is in addition to, and not in lieu of, the services required to be
performed by G.T. Capital under the applicable Investment Management and
Administration Contract (defined below). A commission paid to such broker may be
higher than that which another qualified broker would have charged for effecting
the same transaction, provided that 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 that Theme Portfolio and its other
clients and that the total commissions paid by the Theme Portfolio will be
reasonable in relation to the benefits received by that Theme Portfolio over the
long term. Research services may also be received from dealers who execute Theme
Portfolio transactions in over-the-counter markets.
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 a Theme Portfolio toward payment of that Theme
Portfolio's expenses, such as custodian fees.
Investment decisions for a Theme Portfolio 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 a Theme Portfolio. In such
cases, simultaneous transactions may occur. Purchases or sales are then
allocated as to price or amount in a manner deemed fair and equitable to all
accounts involved. While in some cases this practice could have a detrimental
effect upon the price or value of the security as far as a Theme Portfolio is
concerned, in other cases G.T. Capital believes that coordination and the
ability to participate in volume transactions will be beneficial to that Theme
Portfolio.
Under a policy adopted by the Company's Board of Directors and a Portfolio's
Board of Trustees, 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 Funds and
the other portfolios for which G.T. Capital serves as investment manager or
administrator in selecting broker/dealers for the execution of portfolio
transactions. This policy does not imply a commitment to execute portfolio
transactions through all broker/dealers that sell shares of the Funds and such
other portfolios.
Each Theme Portfolio contemplates purchasing most foreign equity securities in
OTC markets or stock exchanges located in the countries in which the respective
principal offices of the issuers of the various securities are located, if that
is the best available market. The fixed commissions paid in connection with most
such foreign stock transactions generally are higher than negotiated commissions
on U.S. transactions. There generally is less government supervision and
regulation of foreign stock exchanges and brokers than in the United States.
Foreign security settlements may in some instances be subject to delays and
related administrative uncertainties.
Foreign equity securities may be held by a Theme Portfolio 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
Statement of Additional Information Page 22
<PAGE>
G.T. GLOBAL THEME FUNDS
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 a Theme Portfolio may invest are generally traded in
the over-the-counter markets.
A Theme Portfolio does not have any obligation to deal with any broker/dealer or
group of broker/dealers in the execution of securities transactions. Each Theme
Portfolio contemplates that, consistent with the policy of obtaining the best
net results, brokerage transactions may be conducted through certain companies
that are members of the BIL GT Group. The Company's Board of Directors or the
Portfolios' Board of Trustees, as applicable, has adopted procedures in
conformity with Rule 17e-1 under the 1940 Act to ensure that all brokerage
commissions paid to such affiliates are reasonable and fair in the context of
the market in which they are operating. Any such transactions will be effected
and related compensation paid only in accordance with applicable SEC
regulations. For the fiscal years ended October 31, 1994, 1993, 1992, the Health
Care Fund paid aggregate brokerage commissions of $480,241, $665,620 and
$480,293, respectively. For the fiscal years ended October 31, 1994 and 1993 and
for the fiscal period January 27, 1992 (commencement of operations) to October
31, 1992, the Telecommunications Fund paid aggregate brokerage commissions of
$5,674,965, $2,051,270 and $1,110,119, respectively. For the fiscal period May
31, 1994 (commencement of operations) to October 31, 1994, the Financial
Services Portfolio, Infrastructure Portfolio and Natural Resources Portfolio
paid aggregate brokerage commissions of $18,145, $111,512 and $132,572,
respectively.
THEME PORTFOLIO TRADING AND TURNOVER
Although each Theme Portfolio does not intend generally to trade for short-term
profits, the securities held by that Theme 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 (except to the extent necessary to
avoid non-compliance with the "Short-Short Limitation" described in "Taxes").
A Theme Portfolio engages in such trading when G.T. Capital has concluded that
the sale of a security owned by that Theme Portfolio 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 each
Theme Portfolio's investment objective, a security may also 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.
Each Theme Portfolio 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 a Theme Portfolio 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 that Theme Portfolio
during such year. Higher portfolio turnover involves correspondingly greater
brokerage commissions and other transaction costs that the Theme Portfolio will
bear directly. For the fiscal years ended October 31, 1994 and 1993, the
Telecommunications Fund's portfolio turnover rates were 57% and 41%,
respectively. For the fiscal years ended October 31, 1994 and 1993, the Health
Care Fund's portfolio turnover rates were 64% and 61%, respectively. For the
fiscal period May 31, 1994 (commencement of operations) to October 31, 1994, the
portfolio turnover rates for the Financial Services Portfolio, Infrastructure
Portfolio and Natural Resources Portfolio were 53%, 18% and 137%, respectively.
Statement of Additional Information Page 23
<PAGE>
G.T. GLOBAL THEME FUNDS
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 term
"Directors" as used below refers to the Company's Directors and the Portfolios'
Trustees collectively. The Company's Directors and Executive Officers and the
Portfolios' Trustees and Executive Officers are listed below.
<TABLE>
<CAPTION>
NAME, POSITION(S) WITH THE PRINCIPAL OCCUPATIONS AND BUSINESS
COMPANY AND ADDRESS EXPERIENCE FOR PAST 5 YEARS
- --------------------------------------- ------------------------------------------------------------------------------------------
<S> <C>
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 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 with Baker & McKenzie (a law firm), and serves as Director and Chairman of C.D.
Director Stimson Company (a private investment company); Trustee, Seattle Art Museum. Mr. Bayley
Two Embarcadero Center also is a director or trustee of each of the other investment companies registered under
San Francisco, CA 94111 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 Investments and a
Vice President and Chief Director of G.T. Capital since 1992. Prior to joining G.T. Capital, Mr. Kreps was Senior
Investment Officer - Vice 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 24
<PAGE>
G.T. GLOBAL THEME FUNDS
<TABLE>
<CAPTION>
NAME, POSITION(S) WITH THE PRINCIPAL OCCUPATIONS AND BUSINESS
COMPANY AND ADDRESS EXPERIENCE FOR PAST 5 YEARS
- --------------------------------------- ------------------------------------------------------------------------------------------
James R. Tufts, 37 Senior Vice President -- Finance and Administration of G.T. Capital, G.T. Global and G.T.
Senior Vice President and Services since 1994. Prior thereto, Mr. Tufts was Vice President -- Finance of G.T.
Chief Financial Officer Capital and G.T. Global since 1987; Vice President -- Finance of G.T. Services since 1990;
50 California Street and a Director of G.T. Capital, G.T. Global and G.T. Services since 1991.
San Francisco, CA 94111
<S> <C>
Kenneth W. Chancey, 50 Vice President of G.T. Capital and G.T. Global since 1992. Mr. Chancey was Vice President
Vice President and Principal of Putnam Fiduciary Trust Company from 1989 to 1992.
Accounting Officer
50 California Street
San Francisco, CA 94111
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.
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. Global Developing Markets Fund, Inc., and a Trustee and
officer of G.T. Global Growth Series, G.T. Greater Europe Fund, G.T. Global
Variable Investment Trust, G.T. Global Variable Investment Series, Global
Investment Portfolio (of which the Portfolios are subtrusts), and Global High
Income 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 administrated 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 a year, plus $300 per Fund for each meeting of the Board attended by the
Director, and reimburses travel and other expenses incurred in connection with
attending Board meetings. Other Directors and officers receive no compensation
or expense reimbursement from the Company. As of the date of this Statement, 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 each Fund or
of all the Company's funds in the aggregate. For the fiscal year ended December
31, 1994, the Company paid Mr. Anderson, Mr. Bayley, Mr. Patterson and Ms.
Quigley Directors' fees and expense reimbursements of $37,114, $39,425, $31,941
and $33,178, respectively. For the fiscal 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 $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 exercised 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 Funds,
except the Financial Services Fund, in the aggregate.
As of the date of this Statement of Additional Information, the officers and
Directors and their families or a group owned in the aggregate beneficially or
of record 1.04% of the outstanding shares of the Financial Services Fund.
Statement of Additional Information Page 25
<PAGE>
G.T. GLOBAL THEME FUNDS
MANAGEMENT
- --------------------------------------------------------------------------------
INVESTMENT MANAGEMENT AND ADMINISTRATION SERVICES RELATING TO THE FEEDER FUNDS
AND THE PORTFOLIOS
G.T. Capital serves as each Portfolio's investment manager and administrator
under an Investment Management and Administration Contract between each
Portfolio and G.T. Capital ("Portfolio Management Contract") G.T. Capital serves
as administrator to each Feeder Fund under an administration contract between
the Company and G.T. Capital ("Administration Contract"). The Administration
Contract will not be deemed an advisory contract, as defined under the 1940 Act.
As investment manager and administrator, G.T. Capital makes all investment
decisions for each Portfolio and, as administrator, administers each Portfolio's
and each Feeder 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 each
Portfolio and each Feeder Fund and provides suitable office space, necessary
small office equipment and utilities. For these services, each Feeder Fund pays
administration fees, computed daily and paid monthly, to G.T. Capital at the
annualized rate of 0.25% of the Fund's average daily net assets. In addition,
each Feeder Fund bears a pro rata portion of the investment management and
administration fee paid by its corresponding Portfolio to G.T. Capital. Each
Portfolio pays such fees based on its average daily net assets, also computed
daily and paid monthly, at the annualized rate of 0.725% on the first $500
million, .70% on the next $500 million, .675% on the next $500 million, and .65%
on all amounts thereafter.
The Portfolio Management Contract and the Administration Contract each has an
initial two-year term (or will expire on June 30, 1995, whichever is earlier)
with respect to each Portfolio and its corresponding Feeder Fund, respectively,
from the date of the commencement of the Fund's operations. The Portfolio
Management Contract may be renewed with respect to Portfolio for additional
one-year terms thereafter, provided that any such renewal has been specifically
approved at least annually by (i) the Portfolios' Board of Trustees or the vote
of a majority of the Portfolio's outstanding voting securities (as defined in
the 1940 Act) and (ii) a majority of Trustees who are not parties to the
Portfolio Management Contract or "interested persons" of any such party (as
defined in the 1940 Act), cast in person at a meeting called for the specific
purpose of voting on such approval. Regarding the Financial Services Fund,
Infrastructure Fund and Natural Resources Fund, the Portfolio Management
Contract and the Administration Contract were each approved by vote of the
Portfolios' Board of Trustees and the Company's Board of Directors on January
11, 1994, and by G.T. Capital as the initial shareholder of the Feeder Fund on
April 8, 1994. Regarding the Consumer Products and Services Fund, the Portfolio
Management Contract and the Administration Contract were each approved by vote
of the Portfolios' Board of Trustees and the Company's Board of Directors on
June 15, 1994, and by G.T. Capital as the initial shareholder of the Fund on
December 20, 1994. The Portfolio Management Contract provides that with respect
to each Portfolio, and the Administration Contract provides that with respect to
each Feeder Fund, either the Company, each Portfolio or G.T. Capital may
terminate the Contract without penalty upon sixty days' written notice to the
other party. The Portfolio Management Contract terminates automatically in the
event of its assignment (as defined in the 1940 Act).
Under the Portfolio Management Contract, G.T. Capital has agreed to reduce the
investment management and administration fees payable by each Portfolio by the
amount that the ordinary operating expenses (exclusive of brokerage commissions,
organization expenses, interest, taxes, distribution-related expenses, certain
expenses attributable to investing outside the United States and extraordinary
expenses) of that Portfolio for any fiscal year borne by its corresponding Fund,
together with the direct ordinary operating expenses (exclusive of brokerage
commission, organization expenses, taxes, interest, certain distribution-related
expenses and extraordinary expenses) of such Fund, shall exceed the most
stringent limits prescribed by any state in which the shares of the Fund are
offered for sale. Currently, the most restrictive applicable limitation provides
that a Feeder 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 all average net assets thereafter. G.T. Capital and
G.T. Global have voluntarily undertaken to limit each Feeder Fund's expenses
(exclusive of brokerage commissions, interest, taxes and extraordinary expenses)
to the maximum annual level of 1.90%, of the average daily net assets of the
Fund's Advisor Class shares during each fiscal year, and G.T. Capital has agreed
to reimburse each Feeder Fund if its expenses exceed that amount.
Statement of Additional Information Page 26
<PAGE>
G.T. GLOBAL THEME FUNDS
INVESTMENT MANAGEMENT AND ADMINISTRATION SERVICES RELATING TO THE HEALTH CARE
FUND AND TELECOMMUNICATIONS FUND
G.T. Capital serves as the investment manager and administrator to the Health
Care Fund and Telecommunications Fund 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 Health Care Fund and Telecommunications Fund and
administers the Health Care Fund and Telecommunications 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 Health Care Fund and
Telecommunications Fund, and provides suitable office space, necessary small
office equipment and utilities. For these services, the Health Care Fund and
Telecommunications Fund each pays G.T. Capital investment management and
administration fees, based on the Health Care Fund and Telecommunications 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 all amounts thereafter.
The Management Contract relating to the Health Care Fund and the
Telecommunications Fund took effect August 7, 1989, and January 27, 1992,
respectively, and had an initial two-year term. The Management Contract may be
renewed for additional one-year terms thereafter with respect to the Health Care
Fund and Telecommunications 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 Health Care Fund and
Telecommunications 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 most recently approved with respect to the
Health Care Fund and Telecommunications Fund by the vote of the Board of
Directors of the Company on June 15, 1994 and by the Health Care Fund's and
Telecommunications Fund's shareholders at their meetings on June 25, 1991 and
January 20, 1993, respectively. The Management Contract provides that with
respect to the Health Care Fund and Telecommunications 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 waive its investment
management and administration fees from the Health Care Fund and
Telecommunications Fund and to reimburse the Health Care Fund's and
Telecommunications Fund to the extent necessary to assure that the Health Care
Fund's and Telecommunications Fund's annual expenses (exclusive of brokerage
commissions, organizational expenses, taxes, interest, distribution-related
expenses, certain expenses attributable to investing outside the United States
and extraordinary expenses) do not exceed the most stringent expense limitations
prescribed by any state in which the Health Care Fund and Telecommunications
Fund's shares are offered for sale. Currently, the most restrictive applicable
limitation provides that the Health Care Fund and Telecommunications 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. In addition, G.T. Global and G.T. Capital
have voluntarily undertaken to limit the Health Care Fund's and
Telecommunications Fund's Class A and Class B share expenses (exclusive of
brokerage commissions, taxes, interest and extraordinary expenses) to the annual
level of 2.40% and 2.90% of the average daily net assets of the Class A and
Class B shares, respectively, during each fiscal year, and G.T. Capital has
agreed to reimburse the Health Care Fund and Telecommunications Fund if the
Health Care Fund's and Telecommunications Fund's expenses exceed that amount.
Statement of Additional Information Page 27
<PAGE>
G.T. GLOBAL THEME FUNDS
The following table discloses the amount of investment management and
administration fees paid by the Theme Portfolios to G.T. Capital during the
periods shown:
HEALTH CARE FUND
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31, AMOUNT PAID
- ---------------------------------------------------------------------------------------------------------- --------------
<S> <C>
1994...................................................................................................... $ 4,353,688
1993...................................................................................................... 5,331,224
1992...................................................................................................... 6,789,400
</TABLE>
TELECOMMUNICATIONS FUND
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31, AMOUNT PAID
- ---------------------------------------------------------------------------------------------------------- --------------
<S> <C>
1994...................................................................................................... $ 21,926,187
1993...................................................................................................... 7,254,611
1992 (since Fund inception on January 27, 1992)........................................................... 2,624,818
</TABLE>
FINANCIAL SERVICES PORTFOLIO
<TABLE>
<CAPTION>
AMOUNT PAID
--------------
<S> <C>
May 31, 1994 (commencement of operations) to October 31, 1994............................................. $ 0
</TABLE>
INFRASTRUCTURE PORTFOLIO
<TABLE>
<CAPTION>
AMOUNT PAID
--------------
<S> <C>
May 31, 1994 (commencement of operations) to October 31, 1994............................................. $ 3,021
</TABLE>
NATURAL RESOURCES PORTFOLIO
<TABLE>
<CAPTION>
AMOUNT PAID
--------------
<S> <C>
May 31, 1994 (commencement of operations) to October 31, 1994............................................. $ 0
</TABLE>
For the fiscal period May 31, 1994 (commencement of operations) to October 31,
1994, G.T. Capital reimbursed the Financial Services Portfolio, Infrastructure
Portfolio and Natural Resources Portfolio for their respective investment
management and administration fees in the amounts of $8,249, $48,901 and
$28,500, respectively. For the same period, the Financial Services Fund,
Infrastructure Fund and Natural Resources Fund did not pay any administration
fees; however, G.T. Capital reimbursed those Funds for such fees in amounts of
$3,029, $19,370 and $10,436, respectively. Accordingly, G.T. Capital reimbursed
the Financial Services Fund, Infrastructure Fund and Natural Resources Fund and
their respective Portfolios investment management and administration fees in the
aggregate amounts of $11,278, $68,271 and $38,936, respectively.
For the fiscal period May 31, 1994 (commencement of operations) to October 31,
1994, G.T. Capital, pursuant to a voluntary expense undertaking to limit
expenses to the maximum annual level of 2.40% and 2.90%, respectively, of
average daily net assets of the Class A shares and Class B shares of the Funds,
reimbursed the Financial Services Fund and Natural Resources Fund for Class A
and Class B share expenses in the additional amounts of $85,566 and $49,648,
respectively.
DISTRIBUTION SERVICES RELATING TO EACH FUND
Each Fund's Advisor Class shares are offered continuously through each 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. Services, the Funds' Transfer Agent, has been retained by the Funds to
perform shareholder servicing, reporting and general transfer agent functions
for the Funds. For these services, the Transfer Agent receives an annual
maintenance fee of $17.50 per account, a new account fee of $4.00 per account, a
per transaction fee of $1.75 for all transactions other than exchanges and a per
exchange fee of $2.25. The Transfer Agent is also reimbursed by the Funds for
its out-of-pocket expenses for such items as postage, forms, telephone charges,
stationery and office supplies.
EXPENSES OF THE FUNDS AND OF THE PORTFOLIOS
Each Fund and each Portfolio pays all expenses not assumed by G.T. Capital, G.T.
Global and other agents. These expenses include, in addition to the advisory,
administration, distribution and brokerage fees discussed above, legal and
Statement of Additional Information Page 28
<PAGE>
G.T. GLOBAL THEME FUNDS
audit expenses, custodian and transfer agency fees, trustees' fees,
organizational fees, fidelity bond and other insurance premiums, taxes,
extraordinary expenses and expenses of reports and prospectuses sent to existing
investors. Certain of these expenses, such as custodial fees and brokerage fees
generally are higher for non-U.S. securities. The allocation of general Company
expenses and expenses shared among the Funds 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 Funds or the nature of the service
performed and relative applicability to the Funds. 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 each 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 Funds or the
Portfolios generally are higher than the comparable expenses of such other
funds.
- --------------------------------------------------------------------------------
VALUATION OF FUND SHARES
- --------------------------------------------------------------------------------
As described in the Prospectus, each Fund's net asset value per share for each
class of shares is determined each day on which The New York Stock Exchange
("NYSE") is open for business ("Business Day") as of the close of regular
trading on the NYSE (currently 4:00 p.m. Eastern Time, unless weather, equipment
failure or other factors contribute to an earlier closing time). Currently, the
NYSE is closed on weekends and on certain days relating to the following
holidays: New Year's Day, Presidents' Day, Good Friday, Memorial Day, July 4th,
Labor Day, Thanksgiving Day and Christmas Day.
Each Theme Portfolio's 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 OTC market are valued at the last available sale price prior to
the time of valuation. Securities and other assets for which market quotations
are not readily available (including restricted securities that are subject to
limitations as to their sale) are valued at fair value as determined in good
faith by or under the direction of the Portfolios' Board of Trustees or the
Company's Board of Directors, as applicable.
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 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.
Options on indices, securities and currencies purchased by the Theme Portfolios
are valued at their last bid price in the case of listed options or at the
average of the last bid prices obtained from dealers in the case of OTC options.
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 a Theme Portfolio are readily available, those
positions will be valued based upon such quotations.
Securities and other assets for which market quotations are not readily
available are valued at fair value as determined in good faith by or under the
direction of the Portfolios' Board of Trustees or the Company's Board of
Directors, as applicable. 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 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 Theme Portfolios in connection with such disposition). In
addition, other factors, such as the cost of the investment, the market value of
any unrestricted securities of the same class (both at the time of purchase and
at the time of valuation), the size of the holding, the prices of any recent
transactions or offers with respect to such securities and any available
analysts' reports regarding the issuer, generally are considered.
The fair value of any other assets is added to the value of all securities
positions to arrive at the value of each Fund's total assets (which, for each
Feeder Fund is the value of its investment in its corresponding Portfolio). Each
Fund's liabilities,
Statement of Additional Information Page 29
<PAGE>
G.T. GLOBAL THEME FUNDS
including accruals for expenses, are deducted from its total assets. Once the
total value of a Fund's net assets is so determined, that value is then divided
by the total number of shares outstanding (excluding treasury shares), and the
result, rounded to the nearer cent, is the net asset value per share.
Any assets or liabilities initially expressed in terms of foreign currencies are
translated into U.S. dollars at the official exchange rate or, alternatively, at
the mean of the current bid and asked prices of such currencies against the U.S.
dollar last quoted by a major bank that is a regular participant in the foreign
exchange market or on the basis of a pricing service that takes into account the
quotes provided by a number of such major banks. If none of these alternatives
are available or none are deemed not to provide a suitable methodology for
converting a foreign currency into U.S. dollars, the Portfolios' Board of
Trustees or the Company's Board of Directors, as applicable, in good faith, will
establish a conversion rate for such currency.
European, Far Eastern, or Latin American securities trading may not take place
on all days on which the NYSE is open. Further, trading takes place in various
foreign markets on days on which the NYSE is not open. Trading in securities on
European and Far Eastern securities exchanges and OTC markets generally is
completed well before the close of business in New York. Consequently, the
calculation of each Fund's net asset value may not always take place
contemporaneously with the determination of the prices of securities held by
each Fund. Events affecting the values of securities held by the Theme
Portfolios that occur between the time their prices are determined and the close
of normal trading on the NYSE will not be reflected in a Fund's net asset value
unless G.T. Capital, under the supervision of the Company's Board of Directors
or the Portfolios' Board of Trustees, as applicable, determines that the
particular event would materially affect net asset value. As a result, a Fund's
net asset value may be significantly affected by such trading on days when a
shareholder has no access to that Fund.
- --------------------------------------------------------------------------------
INFORMATION RELATING TO SALES
AND REDEMPTIONS
- --------------------------------------------------------------------------------
PAYMENT AND TERMS OF OFFERING
Payment for Advisor Class shares of a Fund 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 canceled due to nonpayment (for example, on account of a check 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 canceled due to nonpayment may be prohibited
from placing future orders.
Each 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 a Fund
until it has been confirmed in writing by the Transfer Agent (or other
arrangements made with the Fund, in the case of orders utilizing wire transfer
of funds, as described above) and payment has been received. To protect existing
shareholders, each 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 a 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
of a Fund 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.
Statement of Additional Information Page 30
<PAGE>
G.T. GLOBAL THEME FUNDS
The privilege may be discontinued or changed at any time by any of the funds
upon sixty days prior written notice to the shareholders of such fund and is
available only in states where the exchange may be made legally. Before
purchasing shares through the exercise of the exchange privilege, a shareholder
should obtain and read a copy of the prospectus of the fund to be purchased and
should consider the investment objective(s) of 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 that Fund. Proceeds of less than $1,000 will be mailed to
the shareholder's registered address of record. The Funds and the Transfer Agent
reserve the right to refuse any telephone instructions and may discontinue the
aforementioned redemption options upon thirty days' written notice.
SUSPENSION OF REDEMPTION PRIVILEGES
Each 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 would prohibit the Funds or the Portfolios
from disposing of portfolio securities owned by them 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 a Fund to
pay for all redemptions in cash. In such cases, the Board may authorize payment
to be made in portfolio securities or other property of a Fund so called
"redemptions in kind." Payment of redemptions in kind will be made in readily
marketable securities. Such securities would be valued at the same value
assigned to them in computing the net asset value per share. Shareholders
receiving such securities would incur brokerage costs in selling any such
securities so received. However, despite the foregoing, the Company has filed
with the SEC an election pursuant to Rule 18f-1 under the 1940 Act. This means
that each Fund will pay in cash all requests for redemption made by any
shareholder of record, limited in amount with respect to each shareholder during
any ninety-day period to the lesser of $250,000 or 1% of the net asset value of
a Fund at the beginning of such period. This election will be irrevocable so
long as Rule 18f-1 remains in effect, unless the SEC by order upon application
permits the withdrawal of such election.
- --------------------------------------------------------------------------------
TAXES
- --------------------------------------------------------------------------------
TAXATION OF THE FUNDS
Each Fund is treated as a separate corporation for federal income tax purposes.
In order to qualify or continue to qualify for treatment as a regulated
investment company ("RIC") under the Internal Revenue Code of 1986, as amended
("Code"), each Fund must distribute to its shareholders for each taxable year at
least 90% of its investment company taxable income (consisting generally of net
investment income, net short-term capital gain and net gains from certain
foreign currency transactions) ("Distribution Requirement") and must meet
several additional requirements. With respect to each Fund, these requirements
include the following: (1) the Fund must derive at least 90% of its gross income
each taxable year from dividends, interest, payments with respect to securities
loans and gains from the sale or other disposition of securities or foreign
currencies, or other income (including gains from options, Futures or Forward
Contracts) derived with respect to its business of investing in securities or
those currencies ("Income Requirement"); (2) the Fund must derive less than 30%
of its gross income each taxable year from the sale or other disposition of
securities, or any of the following, that were held for less than three months
- -- options or Futures (other than those on foreign currencies), or foreign
currencies (or options, Futures or Forward Contracts thereon) that are not
directly related to the Fund's principal business of investing in securities (or
options and Futures with respect to securities) ("Short-Short Limitation"); (3)
at the close of each quarter of the Fund's taxable year, at least 50% of the
value of its total assets must be represented by cash and cash
Statement of Additional Information Page 31
<PAGE>
G.T. GLOBAL THEME FUNDS
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. Each Feeder Fund, as an investor in its corresponding Portfolio, is
deemed to own a proportionate share of the Portfolio's assets, and to earn a
proportionate share of the Portfolio's income, for purposes of determining
whether the Fund satisfies all the requirements described above to qualify as a
RIC.
Each Fund will be subject to a nondeductible 4% excise tax ("Excise Tax") to the
extent it fails to distribute by the end of any calendar year substantially all
of its ordinary income for that year and capital gain net income for the
one-year period ending on October 31 of that year, plus certain other amounts.
See the next section for a discussion of the tax consequences to each Feeder
Fund of hedging transactions engaged in, and investments in passive foreign
investment companies ("PFICs") and other foreign securities by its corresponding
Portfolio.
TAXATION OF THE PORTFOLIOS
Each Portfolio is treated as a separate partnership for federal income tax
purposes and is not a "publicly traded partnership." As a result, each Portfolio
is not subject to federal income tax; instead, each Feeder Fund, as an investor
in its corresponding Portfolio, is required to take into account in determining
its federal income tax liability its share of the Portfolio's income, gains,
losses, deductions and credits, without regard to whether it has received any
cash distributions from the Portfolio. Each Portfolio also is not subject to New
York income or franchise tax.
Because, as noted above, each Feeder Fund is deemed to own a proportionate share
of its corresponding Portfolio's assets, and to earn a proportionate share of
its corresponding Portfolio's income, for purposes of determining whether the
Fund satisfies the requirements to qualify as a RIC, each such Portfolio intends
to conduct its operations so that its corresponding Fund will be able to satisfy
all those requirements.
Distributions to each Feeder Fund from its corresponding Portfolio (whether
pursuant to a partial or complete withdrawal or otherwise) will not result in
the Fund's recognition of any gain or loss for federal income tax purposes,
except that (1) gain will be recognized to the extent any cash that is
distributed exceeds the Fund's basis for its interest in its corresponding
Portfolio before the distribution, (2) income or gain will be recognized if the
distribution is in liquidation of the Fund's entire interest in its
corresponding Portfolio and includes a disproportionate share of any unrealized
receivables held by the Portfolio, and (3) loss will be recognized if a
liquidation distribution consists solely of cash and/or unrealized receivables.
Each Feeder Fund's basis for its interest in its corresponding Portfolio
generally will equal the amount of cash and the basis of any property the Fund
invests in the Portfolio, increased by the Fund's share of the Portfolio's net
income and gains and decreased by (a) the amount of cash and the basis of any
property the Portfolio distributes to the Fund and (b) the Fund's share of the
Portfolio's losses.
FOREIGN TAXES. Dividends and interest received by a Theme Portfolio 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 a Fund's total assets (taking into account, in the case of a
Feeder Fund, its proportionate share of its corresponding Portfolio's 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 (taking into account, in the case of a Feeder Fund, its proportionate
share of those taxes paid by its corresponding Portfolio). Pursuant to the
election, a Fund will treat those taxes as dividends paid to its shareholders
and each shareholder will be required to (1) include in gross income, and treat
as paid by him, his proportionate share of those taxes, (2) treat his share of
those taxes and of any dividend paid by the Fund that represents income from
foreign sources as his own income from those sources, and (3) either deduct the
taxes deemed paid by him in computing his taxable income or, alternatively, use
the foregoing information in calculating the foreign tax credit against his
federal income tax. Each Fund will report to its shareholders shortly after each
taxable year their respective shares of the Fund's income (taking into account,
in the case of a Feeder Fund, its proportionate share of its corresponding
Portfolio's income) from sources within, and taxes paid to, foreign countries
and U.S. possessions if it makes this election.
PASSIVE FOREIGN INVESTMENT COMPANIES. Each Theme Portfolio may invest in the
stock of 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
Statement of Additional Information Page 32
<PAGE>
G.T. GLOBAL THEME FUNDS
average of at least 50% of its assets produce, or are held for the production
of, passive income. Under certain circumstances, a Fund will be subject to
federal income tax on a part (or, in the case of a Feeder Fund, its
proportionate share of a part) of any "excess distribution" received by it (or,
in the case of a Feeder Fund, by its corresponding Portfolio) on the stock of a
PFIC or of any gain on the Fund's (or, in the case of a Feeder Fund, its
corresponding Portfolio's) disposition of that stock (collectively, "PFIC
income"), plus interest thereon, even if the Fund distributes the PFIC income as
a taxable dividend to its shareholders. The balance of the PFIC income will be
included in the Fund's investment company taxable income and, accordingly, will
not be taxable to it to the extent that income is distributed to its
shareholders.
If a Theme Portfolio invests in a PFIC and elects to treat the PFIC as a
"qualified electing fund" ("QEF"), then in lieu of the foregoing tax and
interest obligation, the Theme Portfolio (or, in the case of a Portfolio, its
corresponding Feeder Fund) will be required to include in income each year its
pro rata share of the QEF's annual ordinary earnings and net capital gain (the
excess of net long-term capital gain over net short-term capital loss) -- which
most likely would have to be distributed by that Theme Portfolio (or, in the
case of a Portfolio, its corresponding Feeder Fund) to satisfy the Distribution
Requirement and to avoid imposition of the Excise Tax -- even if those earnings
and gain were not received thereby. In most instances it will be very difficult,
if not impossible, to make this election because of certain requirements
thereof.
The "Tax Simplification 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 will be enacted into law.
Pursuant to proposed regulations, open-end RICs, such as the Funds, would be
entitled to elect to "mark-to-market" their stock in certain PFICs.
"Marking-to-market," in this context, means recognizing as gain for each taxable
year the excess, as of the end of that year, of the fair market value of each
such PFIC's stock over the adjusted basis in that stock (including
mark-to-market gain for each prior year for which an election was in effect).
OPTIONS, FUTURES AND FOREIGN CURRENCY TRANSACTIONS. The Theme Portfolios'
use of hedging transactions, such as selling (writing) and purchasing options
and Futures and entering into Forward Contracts, involves complex rules that
will determine, for federal income tax purposes, the character and timing of
recognition of the gains and losses a Theme Portfolio 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 a Theme Portfolio with respect to its
business of investing in securities or foreign currencies, will qualify as
permissible income under the Income Requirement for that Theme Portfolio (or, in
the case of a Portfolio, its corresponding Feeder Fund). However, income from
the disposition by a Theme Portfolio of options and Futures (other than those on
foreign currencies) will be subject to the Short-Short Limitation for that Theme
Portfolio (or, in the case of a Portfolio, its corresponding Feeder Fund) if
they are held for less than three months. Income from the disposition by a Theme
Portfolio of foreign currencies, and options, Futures and Forward Contracts on
foreign currencies, that are not directly related to its principal business of
investing in securities (or options and Futures with respect thereto) also will
be subject to the Short-Short Limitation for that Theme Portfolio (or, in the
case of a Portfolio, its corresponding Feeder Fund) if they are held for less
than three months.
If a Theme Portfolio satisfies certain requirements, any increase in value of a
position that is part of a "designated hedge" will be offset by any decrease in
value (whether realized or not) of the offsetting hedging position during the
period of the hedge for purposes of determining whether that Theme Portfolio
(or, in the case of a Portfolio, its corresponding Feeder Fund) satisfies the
Short-Short Limitation. Thus, only the net gain (if any) from the designated
hedge will be included in gross income for purposes of that limitation. Each
Theme Portfolio intends that, when it engages in hedging transactions, it will
qualify for this treatment, but at the present time it is not clear whether this
treatment will be available for all of those transactions. To the extent this
treatment is not available, a Theme Portfolio 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
that Theme Portfolio (or, in the case of a Portfolio, its corresponding Feeder
Fund) to qualify or continue to qualify as a RIC.
Futures and Forward Contracts that are subject to section 1256 of the Code
(other than those that are part of a "mixed straddle") ("Section 1256
Contracts") and that are held by a Theme Portfolio at the end of its taxable
year generally will be deemed to have been sold at market value for federal
income tax purposes. Sixty percent of any net gain or loss recognized on these
deemed sales, and 60% of any net 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
Statement of Additional Information Page 33
<PAGE>
G.T. GLOBAL THEME FUNDS
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. Each Theme Portfolio attempts to monitor section 988 transactions to
minimize any adverse tax impact.
TAXATION OF THE FUNDS' SHAREHOLDERS
Dividends and other distributions declared by a Fund in, and payable to
shareholders of record as of a date in, October, November or December of any
year will be deemed to have been paid by the Fund and received by the
shareholders on December 31 of that year if the distributions are paid by the
Fund during the following January. Accordingly, those distributions will be
taxed to shareholders for the year in which that December 31 falls.
A portion of the dividends from a Fund's investment company taxable income
(whether paid in cash or reinvested in additional shares) may be eligible for
the dividends-received deduction allowed to corporations. The eligible portion
may not exceed the aggregate dividends received by a Fund (directly or through a
Portfolio) from U.S. corporations. However, dividends received by a corporate
shareholder and deducted by it pursuant to the dividends-received deduction may
be subject indirectly to the alternative minimum tax.
If Fund shares are sold at a loss after being held for six months or less, the
loss will be treated as long-term, instead of short-term, capital loss to the
extent of any capital gain distributions received on those shares. Investors
also should be aware that if shares are purchased shortly before the record date
for any dividend or other distribution, the shareholder will pay full price for
the shares and receive some portion of the price back as a taxable distribution.
Dividends paid by a Fund to a shareholder who, as to the United States, is a
nonresident alien individual or 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 a Fund to a foreign shareholder
is "effectively connected with the conduct of a U.S. trade or business," in
which case the reporting and withholding requirements applicable to domestic
shareholders will apply. 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.
The foregoing is a general and abbreviated summary of certain federal income tax
considerations affecting the Funds, their shareholders and the Portfolios.
Investors are urged to consult their own tax advisers for more detailed
information and for information regarding any foreign, state and local taxes
applicable to distributions received from a Fund.
Statement of Additional Information Page 34
<PAGE>
G.T. GLOBAL THEME FUNDS
ADDITIONAL INFORMATION
- --------------------------------------------------------------------------------
BIL GT GROUP
Other subsidiaries of the BIL GT Group include the Bank for 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 (Frankfort) 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.
THE COMPANY
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.
CUSTODIAN
State Street Bank and Trust Company ("State Street"), 225 Franklin Street,
Boston, Massachusetts 02110, acts as custodian of the Theme Portfolios' assets.
State Street is authorized to establish and has established separate accounts in
foreign currencies and to cause securities of the Theme Portfolios to be held in
separate accounts outside the United States in the custody of non-U.S. banks.
INDEPENDENT ACCOUNTANTS
The Company's and Global Investment Theme Portfolio's independent accountants
are Coopers & Lybrand, L.L.P., One Post Office Square, Boston, Massachusetts
02109. Coopers & Lybrand, L.L.P. conducts annual audits of the Portfolios' and
the Funds' financial statements, assists in the preparation of each Portfolio's
and each Fund's federal and state income tax returns and consults with the
Company and Global Investment Portfolio 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 is 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 at any time, or to grant the use of such name to any other company.
Statement of Additional Information Page 35
<PAGE>
G.T. GLOBAL THEME FUNDS
INVESTMENT RESULTS
- --------------------------------------------------------------------------------
Each 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 each 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)(n) = 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; (3) reinvestment of
dividends and other distributions at net asset value on the reinvestment date
determined by the Board and (4) a complete redemption at the end of any period
illustrated. The Standardized Returns for the Class A shares of the Health Care
Fund and Telecommunications Fund, stated as average annualized total returns for
the periods shown, were as follows:
<TABLE>
<CAPTION>
HEALTH CARE
PERIOD FUND
- ------------------------------------------------------------------------------------------------------ -------------
<S> <C>
Fiscal year ended October 31, 1994.................................................................... 4.88%
January 27, 1992 through October 31, 1994............................................................. n/a
November 1, 1989 through October 31, 1994............................................................. 10.39%
August 7, 1989 through October 31, 1994............................................................... 10.63 %
<CAPTION>
TELECOMMUNI-
PERIOD CATIONS FUND
- ------------------------------------------------------------------------------------------------------ ---------------
<S> <C>
Fiscal year ended October 31, 1994.................................................................... 1.94%
January 27, 1992 through October 31, 1994............................................................. 16.61%
November 1, 1989 through October 31, 1994............................................................. n/a
August 7, 1989 through October 31, 1994............................................................... n/a
</TABLE>
The Standardized Returns for the Class B Shares of the Health Care Fund and
Telecommunications Fund, which were first offered April 1, 1993, stated as
aggregate returns for the periods shown, were:
<TABLE>
<CAPTION>
HEALTH CARE
PERIOD FUND
- ------------------------------------------------------------------------------------------------------ -------------
<S> <C>
Fiscal year ended October 31, 1994.................................................................... 4.55%
April 1, 1993 through October 31, 1993................................................................ 12.84%
<CAPTION>
TELECOMMUNI-
PERIOD CATIONS FUND
- ------------------------------------------------------------------------------------------------------ ---------------
<S> <C>
Fiscal year ended October 31, 1994.................................................................... 1.50%
April 1, 1993 through October 31, 1993................................................................ 22.39%
</TABLE>
As discussed in the Prospectus, each 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 Non-Standardized Returns for the Class A
shares of the Health Care Fund and Telecommunications Fund, stated as aggregate
total returns for the periods shown, were:
<TABLE>
<CAPTION>
HEALTH CARE
PERIOD FUND
- ------------------------------------------------------------------------------------------------------ -------------
<S> <C>
Fiscal year ended October 31, 1994.................................................................... 10.11%
January 27, 1992 through October 31, 1994............................................................. n/a
August 7, 1989 through October 31, 1994............................................................... 78.16%
<CAPTION>
TELECOMMUNI-
PERIOD CATIONS FUND
- ------------------------------------------------------------------------------------------------------ ---------------
<S> <C>
Fiscal year ended October 31, 1994.................................................................... 7.02%
January 27, 1992 through October 31, 1994............................................................. 60.50%
August 7, 1989 through October 31, 1994............................................................... n/a
</TABLE>
The Non-Standardized Returns for the Class B shares of the Health Care Fund and
Telecommunications Fund, which were first offered on April 1, 1993, stated as
aggregate total returns for the periods shown, were:
<TABLE>
<CAPTION>
HEALTH CARE
PERIOD FUND
- ------------------------------------------------------------------------------------------------------ -------------
<S> <C>
Fiscal year ended October 31, 1994.................................................................... 9.55%
April 1, 1993 through October 31, 1993................................................................ 25.07%
<CAPTION>
TELECOMMUNI-
PERIOD CATIONS FUND
- ------------------------------------------------------------------------------------------------------ ---------------
<S> <C>
Fiscal year ended October 31, 1994.................................................................... 6.50%
April 1, 1993 through October 31, 1993................................................................ 41.70%
</TABLE>
The Non-Standardized Returns for the Class A shares of the Health Care Fund and
Telecommunications Fund, stated as average annualized total returns for the
periods shown, were as follows:
<TABLE>
<CAPTION>
HEALTH CARE
PERIOD FUND
- ------------------------------------------------------------------------------------------------------ -------------
<S> <C>
Fiscal year ended October 31, 1994.................................................................... 10.11%
January 27, 1992 through October 31, 1994............................................................. n/a
November 1, 1989 through October 31, 1994............................................................. 11.47%
August 7, 1989 through October 31, 1994............................................................... 11.66 %
<CAPTION>
TELECOMMUNI-
PERIOD CATIONS FUND
- ------------------------------------------------------------------------------------------------------ ---------------
<S> <C>
Fiscal year ended October 31, 1994.................................................................... 7.02%
January 27, 1992 through October 31, 1994............................................................. 18.69%
November 1, 1989 through October 31, 1994............................................................. n/a
August 7, 1989 through October 31, 1994............................................................... n/a
</TABLE>
Statement of Additional Information Page 36
<PAGE>
G.T. GLOBAL THEME FUNDS
The Non-Standardized Returns for the Class B shares of the Health Care Fund and
Telecommunications Fund, stated as average annualized total returns for the
periods shown, were as follows:
<TABLE>
<CAPTION>
HEALTH CARE
PERIOD FUND
- ------------------------------------------------------------------------------------------------------ -------------
<S> <C>
Fiscal year ended October 31, 1994.................................................................... 9.55%
April 1, 1993 through October 31, 1993................................................................ 15.18%
<CAPTION>
TELECOMMUNI-
PERIOD CATIONS FUND
- ------------------------------------------------------------------------------------------------------ ---------------
<S> <C>
Fiscal year ended October 31, 1994.................................................................... 6.50%
April 1, 1993 through October 31, 1993................................................................ 24.62%
</TABLE>
The Financial Services Fund, Infrastructure Fund and Natural Resources Fund
Standardized Returns for their Class A shares, stated as aggregate total returns
at October 31, 1994, were as follows:
<TABLE>
<CAPTION>
FINANCIAL SERVICES INFRASTRUCTURE
PERIOD FUND FUND
- ----------------------------------------------------------------------------- ------------------- -----------------
<S> <C> <C>
May 31, 1994 through October 31, 1994........................................ (3.17 )% 3.92%
<CAPTION>
NATURAL RESOURCES
PERIOD FUND
- ----------------------------------------------------------------------------- ---------------------
<S> <C>
May 31, 1994 through October 31, 1994........................................ 3.42%
</TABLE>
The Financial Services Fund, Infrastructure Fund and Natural Resources Fund
Standardized Returns for their Class B shares, stated as aggregate total returns
at October 31, 1994, were as follows:
<TABLE>
<CAPTION>
FINANCIAL SERVICES INFRASTRUCTURE
PERIOD FUND FUND
- ----------------------------------------------------------------------------- ------------------- ---------------
<S> <C> <C>
May 31, 1994 through October 31, 1994........................................ (3.51 )% 3.92%
<CAPTION>
NATURAL RESOURCES
PERIOD FUND
- ----------------------------------------------------------------------------- -------------------
<S> <C>
May 31, 1994 through October 31, 1994........................................ 3.31%
</TABLE>
The Non-Standardized Returns for the Class A shares of Financial Services Fund,
Infrastructure Fund and Natural Resources Fund, stated as aggregate total
returns at October 31, 1994, were as follows:
<TABLE>
<CAPTION>
FINANCIAL SERVICES INFRASTRUCTURE
PERIOD FUND FUND
- ----------------------------------------------------------------------------- ------------------- -----------------
<S> <C> <C>
May 31, 1994 through October 31, 1994........................................ 1.66 % 9.10%
<CAPTION>
NATURAL RESOURCES
PERIOD FUND
- ----------------------------------------------------------------------------- ---------------------
<S> <C>
May 31, 1994 through October 31, 1994........................................ 8.57%
</TABLE>
The Non-Standardized Returns for the Class B shares of Financial Services Fund,
Infrastructure Fund and Natural Resources Fund, stated as aggregate total
returns at October 31, 1994, were as follows:
<TABLE>
<CAPTION>
FINANCIAL SERVICES INFRASTRUCTURE
PERIOD FUND FUND
- ----------------------------------------------------------------------------- ------------------- -----------------
<S> <C> <C>
May 31, 1994 through October 31, 1994........................................ 1.49 % 8.92%
<CAPTION>
NATURAL RESOURCES
PERIOD FUND
- ----------------------------------------------------------------------------- ---------------------
<S> <C>
May 31, 1994 through October 31, 1994........................................ 8.31%
</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. Each Fund's investment results will vary
from time to time depending upon market conditions, the composition of each
Fund's portfolio and operating expenses of each Fund, so that current or past
yield or total return should not be considered representative of what an
investment in each Fund may earn in any future period. These factors and
possible differences in the methods used in calculating investment results
should be considered when comparing each Fund's investment results with those
published for other investment companies and other investment vehicles. Each
Fund's results also should be considered relative to the risks associated with
such Fund's investment objective and policies. Each Fund will include
performance data for all classes of shares of that Fund in any advertisement or
information including performance data for each Fund.
IMPORTANT POINTS TO NOTE ABOUT THE FOLLOWING WORLD FINANCIAL AND ECONOMIC DATA
The following information is based on sources believed to be reliable, but which
may be subject to revision and which has not been independently verified by the
Company or G.T. Global. 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 this information may be useful to investors
considering whether and to what extent to diversify their investments through
the purchase of mutual funds investing in securities on a global basis. However,
this data is not a representation of the past performance of any of these Funds,
nor is it a prediction of such performance. The performance of the Funds will
differ from the historical performance of the indices represented above. The
performance of indices does not take expenses into account, while each Fund
incurs expenses in its operations, which will reduce performance. Each Fund is
actively managed, I.E., G.T. Capital, as each Fund's investment manager,
actively purchases and sells securities in seeking each Fund's investment
objective. Moreover, each Fund may invest a portion of its assets in corporate
bonds, while
Statement of Additional Information Page 37
<PAGE>
G.T. GLOBAL THEME FUNDS
the below data relates only to government bonds. Each of these factors will
cause the performance of each Fund to differ from the indices shown below.
Each 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 Hutton 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,
Inc. or BBB by Standard and Poor's Ratings Group, or, in the case of
nonrated bonds, BBB by Fitch Investors Service (excluding collateralized
mortgage obligations).
(3) The Consumer Price Index, which is a measure of the average change
in prices over time in a fixed market basket of goods and services (e.g.,
food, clothing, shelter, fuels, transportation fares, charges for doctors'
and dentists' services, prescription medicines, and other goods and services
that people buy for day-to-day living). There is inflation risk which does
not affect a security's value but its purchasing power i.e. the risk of
changing price levels in the economy that affects security prices or the
price of goods and services.
(4) Data and mutual fund rankings published or prepared by Lipper
Analytical Data Services, Inc. ("Lipper"), CDA/Wiesenberger Investment
Company Services ("CDA/Wiesenberger"), Morningstar, Inc. and/or other
companies that rank and/or compare mutual funds by overall performance,
investment objectives, assets, expense levels, periods of existence and/or
other factors. In this regard each Fund may be compared to the Fund's "peer
group" as defined by Lipper, CDA/Wiesenberger, Morningstar and/or other
firms, as applicable, or to specific funds or groups of funds within or
outside of such peer group. Lipper generally ranks funds on the basis of
total return, assuming reinvestment of distributions, but does not take
sales charges or redemption fees into consideration, and is prepared without
regard to tax consequences. In addition to the mutual fund rankings, the
Fund's performance may be compared to mutual fund performance indices
prepared by Lipper. Morningstar is a mutual fund rating service that also
rates mutual funds on the basis of risk-adjusted performance. Morningstar
ratings are calculated from a fund's three, five and ten year average annual
returns with appropriate fee adjustments and a risk factor that reflects
fund performance relative to the three-month U.S. Treasury bill monthly
returns. Ten percent of the funds in an investment category receive five
stars and 22.5% receive four stars. The ratings are subject to change each
month.
(5) 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.
(6) Ibbottson Associates International Bond Index, which provides a
detailed breakdown of local market and currency returns since 1960.
(7) Standard & Poor's 500 Composite Stock Price Index which is a widely
recognized index composed of the capitalization-weighted average of the
price of 500 of the largest publicly traded stocks in the U.S.
(8) Salomon Brothers Broad Investment Grade Index which is a widely used
index composed of U.S. domestic government, corporate and mortgage-backed
fixed income securities.
(9) Dow Jones Industrial Average.
(10) CNBC/Financial News Composite Index.
(11) Morgan Stanley Capital International World Indices, including, among
others, the Morgan Stanley Capital International Europe, Australia, Far East
Index ("EAFE Index"). The EAFE index is an unmanaged index of more than
1,000 companies of Europe, Australia and the Far East.
(12) Salomon Brothers World Government Bond Index and Salomon Brothers
World Government Bond Index-Non-U.S. are each a widely used index composed
of world government bonds.
(13) The World Bank Publication of Trends in Developing Countries (TIDE).
TIDE provides brief reports on most of the World Bank's borrowing members.
The World Development Report is published annually and looks at global and
regional economic trends and their implications for the developing
economies.
Statement of Additional Information Page 38
<PAGE>
G.T. GLOBAL THEME FUNDS
(15) Datastream and Worldscope each is an on-line database retrieval
service for information including, but not limited to, international
financial and economic data.
(16) International Financial Statistics, which is produced by the
International Monetary Fund.
(17) Various publications and annual reports, produced by the World Bank
and its affiliates.
(18) Various publications from the International Bank for Reconstruction
and Development.
(19) Various publications including, but not limited to ratings agencies
such as Moody's Investors Services, Inc., Fitch Investor's Service, Inc.,
Standard & Poor's Ratings Group.
(20) Wilshire Associates which is an on-line database for international
financial and economic data including performance measure for a wide range
of securities.
(21) Bank Rate National Monitor Index, which an average of the quoted
rates for 100 leading banks and thrifts in ten U.S. cities.
(22) International Finance Corporation (IFC) Emerging Markets Data Base
which provides detailed statistics on stock and bond markets in developing
countries.
(23) Various publications from the Organization for Economic Cooperation
and Development ("OECD").
(24) Average of Savings Accounts, which is a measure of all kinds of
savings deposits, including longer-term certificates (based on figures
supplied by the U.S. League of Savings Institutions). Savings accounts offer
a guaranteed rate of return on principal, but no opportunity for capital
growth. During a portion of the period, the maximum rates paid on some
savings deposits were fixed by law.
Indices, economic and financial data prepared by the research departments of
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, G.T.
Global may use performance rankings, ratings and commentary reported
periodically in national financial publications, including 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 in the future.
From time to time, each Fund and G.T. Global may refer to the number of
shareholders in the Funds or the aggregate number of shareholders in all G.T.
Global Mutual Funds or the dollar amount of each Fund's assets under management
or rankings by DALBAR Surveys, Inc. with respect to mutual fund shareholder
services in advertising materials.
G.T. Global believes each Fund is an appropriate investment for long-term
investment goals including, but not limited to funding retirement, paying for
education or purchasing a house. 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. Each
Fund does not represent a complete investment program and the investors should
consider each Fund as appropriate for a portion of their overall investment
portfolio with regard to their long-term investment goals. There is no assurance
that any such information will lead to achieving these goals or guarantee future
results.
From time to time, G.T. Global may refer to or advertise the names of U.S. and
non-U.S. companies and their products although there can be no assurance that
any G.T. Global Mutual Fund may own the securities of these companies.
Ibbotson Associates of Chicago, Illinois (Ibbotson) provides historical returns
of the capital markets in the United States, including common stocks, small
capitalization stocks, long-term corporate bonds, intermediate-term government
bonds, long-term government bonds, Treasury bills, the U.S. rate of inflation
(based on the CPI), and combinations of various capital markets. The performance
of these capital markets are based on the returns of different indices.
G.T. Global Mutual Funds may use the performance of these capital markets in
order to demonstrate general risk-versus-reward investment scenarios.
Performance comparisons may also include the value of a hypothetical investment
in any of these capital markets. The risks associated with the security types in
any capital market may or may not correspond directly
Statement of Additional Information Page 39
<PAGE>
G.T. GLOBAL THEME FUNDS
to those of the funds. Ibbotson calculates total returns in the same method as
the funds. The funds may also compare performance to that of other compilations
or indices that may be developed and made available in the future.
Each Fund may quote various measures of volatility and benchmark correlation
such as beta, standard deviation and R(2) in advertising. In addition, each Fund
may compare these measures to those of other funds. Measures of volatility seek
to compare each Fund's historical share price fluctuations or total returns
compared to those of a benchmark. All measures of volatility and correlation are
calculated using averages of historical data.
Each Fund may advertise examples of the effects of periodic investment plans,
including the principle of dollar cost averaging programs. In such a program, an
investor invests a fixed dollar amount in a fund at periodic intervals, thereby
purchasing fewer shares when prices are high and more shares when prices are
low. While such a strategy does not assure a profit or guard against loss in a
declining market, the investor's average cost per share can be lower than if
fixed numbers of shares are purchased at the same intervals. In evaluating such
a plan, investors should consider their ability to continue purchasing shares
through periods of low price levels.
Each Fund may be available for purchase through retirement plans or other
programs offering deferral of 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.
Each 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 accounts and 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 organizations 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 materials and advertising discuss
the risks inherent in investing. The major types of investment risk are market
risk, industry risk, credit risk, interest rate risk and inflation risk. Risk
represents the possibility that you may lose some or all of your investment over
a period of time. A basic tenet of investing is the greater the potential
reward, the greater the risk.
Statement of Additional Information Page 40
<PAGE>
G.T. GLOBAL THEME FUNDS
From time to time, the Funds and G.T. Global will quote information including
data regarding industries, individual countries, regions, world stock exchanges,
and economic and demographic statistics from sources G.T. Global deems reliable,
including the economic and financial data of the referenced financial
organizations such as:
1) Stock market capitalization: Morgan Stanley Capital International World
Indices, International Finance Corporation 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.
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: OECD 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).
From time to time, G.T. Global may include in its advertisement and sales
material, information about privatization which is an economic process involving
the sale of state-owned companies to the private sector.
In advertising and sales materials, 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 and income potential.
Statement of Additional Information Page 41
<PAGE>
G.T. GLOBAL THEME FUNDS
HISTORICAL WORLD BOND PERFORMANCE
The following chart shows the yield to maturity (including future interest
payments and principal repayment at par) of 10 year government bonds, as priced
by Salomon Brothers, Inc. This data is based on U.S. dollar values on December
31 of the years shown. The actual total returns of foreign bonds held to
maturity will differ depending on exchange rates during a bond's life.
GOVERNMENT BONDS
YEAR-END YIELDS TO MATURITY
<TABLE>
<CAPTION>
U.S. Canada Germany Japan U.K. Switz.
--------- ----------- ----------- ----------- --------- -----------
<S> <C> <C> <C> <C> <C> <C>
1994................................................ 7.82 9.14 7.62 4.54 8.71 5.22
1993................................................ 6.35 6.61 5.54 3.18 6.39 4.06
1992................................................ 6.67 7.95 7.27 4.70 8.16 5.85
1991................................................ 6.70 8.26 7.92 5.51 9.80 6.30
1990................................................ 8.09 10.27 8.70 6.53 10.93 6.37
1989................................................ 7.90 9.63 7.27 5.57 10.58 5.67
1988................................................ 9.19 10.17 6.54 4.70 10.07 4.11
1987................................................ 8.86 10.09 6.56 4.90 9.65 3.74
1986................................................ 7.23 8.75 6.05 5.30 10.54 4.32
1985................................................ 9.01 9.65 6.28 6.18 10.96 4.46
1984................................................ 11.52 11.58 7.00 6.76 11.16 4.65
<CAPTION>
Neth. France Austl.
--------- ----------- ---------
<S> <C> <C> <C>
1994................................................ 7.75 8.27 9.99
1993................................................ 5.56 5.60 6.68
1992................................................ 7.29 8.09 8.95
1991................................................ 8.33 8.40 9.35
1990................................................ 8.98 10.00 12.04
1989................................................ 7.59 8.93 12.93
1988................................................ 6.46 8.43 12.85
1987................................................ 6.74 9.82 12.84
1986................................................ 6.25 8.87 13.27
1985................................................ 6.81 10.10 14.86
1984................................................ 7.72 12.70 13.50
</TABLE>
The following charts show total returns as of December 31 for the years 1985
through 1994, on bonds issued by various governments. All returns are calculated
in U.S. dollars and include reinvestment of gross yields, and do not assure
deduction of any withholding taxes. These charts were prepared by G.T. Capital
based on Salomon Brothers, Inc. indexes of government bonds with remaining
maturities of at least one year. The time periods shown were generally a period
of decreasing interest rates and increasing market prices for global fixed
income securities.
GOVERNMENT BONDS
ANNUAL TOTAL RETURNS
<TABLE>
<CAPTION>
AUSTRALIA BELGIUM CANADA FRANCE GERMANY ITALY JAPAN UK USA
--------- ------- ------ ------ ------- ------- ------- ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1994...................................... 6.88% 12.22% -9.86% 4.37% 9.98% 4.57% 8.88% -1.54% -3.36%
1993...................................... 15.66% 4.00% 12.01% 13.15% 6.70% 11.08% 27.58% 19.53% 10.69%
1992...................................... -0.26% 7.64% -0.42% 4.27% 5.94% -13.88% 10.84% -4.12% 7.21%
1991...................................... 23.49% 10.89% 21.59% 12.51% 9.75% 13.24% 22.46% 12.65% 15.30%
1990...................................... 16.24% n/a 7.69% 23.52% 16.36% n/a 7.83% 30.88% 8.62%
1989...................................... 5.62% n/a 16.23% 9.14% 6.35% n/a -14.26% -3.91% 14.40%
1988...................................... 28.80% n/a 19.41% 1.63% -7.12% n/a 3.04% 2.44% 7.07%
1987...................................... 28.99% n/a 10.00% 26.58% 29.38% n/a 38.12% 46.61% 1.93%
1986...................................... 16.64% n/a 15.72% 34.09% 37.17% n/a 40.09% 14.77% 15.73%
1985...................................... -12.06% n/a 14.80% 50.51% 43.02% n/a 36.85% 40.18% 20.94%
10 Year Average Annualized Returns from 12/85-12/94
12.28% N/A 10.32% 17.10% 14.81% N/A 16.88% 14.47% 9.64%
<FN>
- --------------
Source: Salomon Brothers, Inc. Countries Identified As "N/A" Were Not Part of
the Salomon Brothers World Government Bond Index During the Years Indicated.
</TABLE>
Statement of Additional Information Page 42
<PAGE>
G.T. GLOBAL THEME FUNDS
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 43
<PAGE>
G.T. GLOBAL THEME FUNDS
From time to time, each 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 44
<PAGE>
G.T. GLOBAL THEME FUNDS
From time to time, each 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 45
<PAGE>
G.T. GLOBAL THEME FUNDS
<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 and policies of The G.T. Global Mutual Funds and their
portfolios and performance will not correspond to the composition and
performance of MSCI indices.
Statement of Additional Information Page 46
<PAGE>
G.T. GLOBAL THEME FUNDS
From time to time, each Fund and G.T. Global may quote information on the top
companies listed on an exchange or index for countries around the world 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>
Further, from time to time, G.T. Global and each Fund will quote information
similar to that described above from sources other than G.T. Capital Management
Inc. such as, but not limited to, S.G. Warburg, Morgan Stanley Capital
International, Wilshire Associates 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 top companies, in any country, listed above.
Statement of Additional Information Page 47
<PAGE>
G.T. GLOBAL THEME FUNDS
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 each 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 48
<PAGE>
G.T. GLOBAL THEME FUNDS
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>
Statement of Additional Information Page 49
<PAGE>
G.T. GLOBAL THEME FUNDS
From time to time, each Fund and G.T. Global may quote the most currently
available data for GDP, GDP Growth, Population, Per Capita GDP, Total Exports,
Total Imports and Inflation Rates and other measurable and quantifiable
expenditures by, 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 each 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 Economics, a World Bank publication.
Statement of Additional Information Page 50
<PAGE>
G.T. GLOBAL THEME FUNDS
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>
Further, from time to time, each Fund and G.T. Global may also quote information
similar to that described above from, but not limited to, other sources, such as
S.G. Warburg, Salomon Brothers, Inc. and Datastream.
Statement of Additional Information Page 51
<PAGE>
G.T. GLOBAL THEME FUNDS
GENERAL INFORMATION ABOUT THE THEME FUNDS AND THEME PORTFOLIOS
Each Theme Portfolio may invest worldwide across industries within the Portfolio
area of concentration without national or regional restrictions. The ability of
each Theme Portfolio to invest worldwide may allow the portfolio managers to
select industries in different economic cycles and varying stages of
development, though there is no assurance that the managers will be successful
in this selection.
Each Theme Portfolio's area of concentration reflects the underlying theme of
the Fund. G.T. Global believes that there are certain social, political and
economic trends that may benefit one or more industries within a Theme
Portfolio's area of concentration. Of course, there is no assurance that any of
the Funds will benefit as a result.
HEALTH CARE FUND
From time to time the Fund and G.T. Global will quote information including but
not limited to data regarding:
/ / Trading volume, number of listed companies and the largest companies of
the global health care industry
/ / Expenditures by various countries, regions and age groups on health care
/ / Population of countries, regions and age groups
/ / Natality and mortality rates in various regions, countries and age
groups
/ / Life expectancy rates in various regions, countries and age groups
/ / New health care products and products seeking approval
/ / Health maintenance organizations (HMOs) and its enrollment growth
/ / Studies from, but not limited to, the American Medical Association
showing the effectiveness of using drugs to cure illness
/ / Medical technology and devices in use or in development
The information quoted has not been independently verified by a Fund or G.T.
Global and will be based on data provided that is believed to be reliable and
accurate from but not limited to the following sources:
/ / Research firms such as Mehta and Isaly which publishes PHARMACEUTICAL
PORTFOLIO RECOMMENDATIONS
/ / OECD and its publications such as the OECD HEALTH DATA, as supplemented
annually
/ / Morgan Stanley Capital International stock market industry indices such
as Health & Personal Care
/ / The World Bank and its publications such as THE WORLD DEVELOPMENT
REPORT, as supplemented annually
/ / International Finance Corporation (IFC) and publications such as the
EMERGING STOCK MARKETS FACTBOOK
Statement of Additional Information Page 52
<PAGE>
G.T. GLOBAL THEME FUNDS
INFORMATION ABOUT THE GLOBAL HEALTH CARE INDUSTRY
The Health Care Fund and G.T. Capital believe that certain market and
demographic factors merit an investor's consideration of making a health care
investment. Worldwide standards of living and life expectancy have increased at
a substantial rate during the past twenty years (based on the most recent data
available at December 31, 1992, as compiled by the OECD). G.T. Capital expects
this growth, which works to the general benefit of the global health care
industry, to continue at a roughly comparable rate in the future, although no
assurances can be given in this regard. Moreover, according to G.T. Capital, the
health care industry historically has proven to be a relatively non-cyclical
industry that continues to provide goods and services to the public in periods
of economic weakness as well as economic strength.
G.T. Capital believes that the anticipated increase in the world's elderly
population could increase demand for health care products and services.
According to data compiled by G.T. Capital, in Japan the number of people age 65
and older is expected to grow over 100% by the year 2025; in Germany, France and
the U.S., the same age group should grow 40%. Similarly, the U.S. Census Bureau
predicts the number of Americans 85 and older to double in the next 30 years.
Statement of Additional Information Page 53
<PAGE>
G.T. GLOBAL THEME FUNDS
The following charts, from the Health Data Program of the OECD, provides
information on the populations, birth rates, mortality rates, life expectancy
and health care expenditures for some of the world's countries.
<TABLE>
<CAPTION>
LIFE EXPECTANCY AT SELECTED AGES
------------------------------------------------------------------------
FEMALES
AT FEMALES FEMALES FEMALES MALES AT MALES MALES MALES
BIRTH AT 40 AT 60 AT 80 BIRTH AT 40 AT 60 AT 80
COUNTRY YEARS YEARS YEARS YEARS YEARS YEARS YEARS YEARS
- -------------------- ------- ------- ------- ------- -------- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
AUSTRALIA........... 80.0 41.5 23.1 8.6 73.9 36.4 18.8 6.8
AUSTRIA............. 79.0 40.4 22.3 7.6 72.5 34.9 18.1 6.6
BELGIUM............. 79.1 40.6 22.5 7.9 72.4 34.8 17.6 6.1
CANADA.............. 80.4 41.9 23.7 9.3 73.8 36.2 18.9 7.1
DENMARK............. 77.7 39.2 21.7 8.1 72.0 34.3 17.5 6.4
FINLAND............. 78.9 40.2 21.9 7.5 70.9 33.5 17.1 6.1
FRANCE.............. 80.9 n/a n/a n/a 72.7 n/a n/a n/a
GERMANY............. n/a n/a n/a n/a n/a n/a n/a n/a
GREECE.............. 78.6 n/a n/a n/a n/a n/a n/a n/a
ICELAND............. 80.3 41.4 23.3 9.0 75.7 37.7 20.0 7.4
IRELAND............. n/a n/a n/a n/a n/a n/a n/a n/a
ITALY............... n/a n/a n/a n/a n/a n/a n/a n/a
JAPAN............... 81.9 43.0 24.4 8.7 75.9 37.6 20.0 6.9
LUXEMBOURG.......... 78.5 n/a n/a n/a n/a n/a n/a n/a
NETHERLANDS......... 80.1 n/a n/a n/a 73.8 n/a n/a n/a
NORWAY.............. 79.8 n/a n/a 8.1 73.4 n/a n/a 6.4
NEW ZEALAND......... n/a n/a n/a n/a n/a n/a n/a n/a
PORTUGAL............ 77.9 n/a n/a n/a 70.9 n/a n/a n/a
SPAIN............... 80.1 n/a n/a n/a 74.5 n/a n/a n/a
SWEDEN.............. 80.4 41.6 23.3 8.3 74.8 36.7 19.1 6.6
SWITZERLAND......... 80.9 42.3 23.9 8.5 74.0 36.6 19.1 6.8
TURKEY.............. 68.4 35.4 18.1 5.9 64.1 31.5 15.8 5.2
UNITED KINGDOM...... 78.5 39.9 21.8 8.2 73.0 34.9 17.5 6.2
UNITED STATES....... 78.8 n/a n/a n/a 72.0 n/a n/a n/a
<FN>
- ------------------
N.A. indicates that the given country did not report information for the stated
age. 1990 data is the most recent available data.
</TABLE>
<TABLE>
<CAPTION>
TOTAL POPULATION DEMOGRAPHY BY AGE CATEGORY
-----------------------------------------------------
TOTAL POPULATION POPULATION POPULATION
POPULATION 0-64 YEARS 65-79 YEARS 80 YEARS & +
NUMBER POPULATION POPULATION POPULATION
COUNTRY (THOUSANDS) % POP. % POP. % POP.
- -------------------- ----------- ---------- ----------- ------------
<S> <C> <C> <C> <C>
AUSTRALIA........... 17,336 88.6 9.1 2.3
AUSTRIA............. 7,823 84.8 11.6 3.6
BELGIUM............. 9,840 85.1 11.4 3.5
CANADA.............. 27,023 88.4 9.2 2.4
DENMARK............. 5,154 84.4 11.9 3.7
FINLAND............. 5,008 86.4 10.6 3.0
FRANCE.............. 57,050 85.9 10.3 3.8
GERMANY............. 64,036 84.6 11.6 3.8
GREECE.............. 10,264 86.1 10.8 3.1
ICELAND............. 260 89.2 8.3 2.5
IRELAND............. 3,520 88.8 9.1 2.1
ITALY............... 57,783 84.6 12.3 3.1
JAPAN............... 123,920 87.4 10.1 2.5
LUXEMBOURG.......... 378 86.4 10.6 3.0
NETHERLANDS......... 15,065 87.1 9.9 3.0
NORWAY.............. 4,262 83.6 12.6 3.8
NEW ZEALAND......... 3,396 88.9 8.8 2.3
PORTUGAL............ 9,852 86.9 10.6 2.5
SPAIN............... 39,025 86.3 10.8 2.9
SWEDEN.............. 8,617 82.3 13.3 4.4
SWITZERLAND......... 6,860 85.0 11.0 4.0
TURKEY.............. 57,700 95.8 n/a n/a
UNITED KINGDOM...... 57,370 84.2 12.1 3.7
UNITED STATES....... 262,200 87.3 9.8 2.9
<FN>
- ------------------
N.A. indicates that the given country did not report information for the stated
age. 1991 data is the most recent available data.
</TABLE>
Statement of Additional Information Page 54
<PAGE>
G.T. GLOBAL THEME FUNDS
<TABLE>
<CAPTION>
BIRTH AND DEATH RATES PER
1,000 PEOPLE
--------------------------
NATALITY MORTALITY
COUNTRY RATE RATE
- --------------------------------------------------------------------------------------- ----------- -------------
<S> <C> <C>
AUSTRALIA.............................................................................. 14.9 6.9
AUSTRIA................................................................................ 12.0 10.6
BELGIUM................................................................................ 12.6 10.4
CANADA................................................................................. 15.0 7.1
DENMARK................................................................................ 12.6 11.6
FINLAND................................................................................ 13.1 9.8
FRANCE................................................................................. 13.3 9.2
GERMANY................................................................................ 11.3 11.1
GREECE................................................................................. 9.8 9.1
ICELAND................................................................................ 17.6 7.0
IRELAND................................................................................ 15.0 8.9
ITALY.................................................................................. 12.7 9.5
JAPAN.................................................................................. 9.9 6.7
LUXEMBOURG............................................................................. 12.9 9.7
NETHERLANDS............................................................................ 13.2 8.6
NORWAY................................................................................. 14.3 10.5
NEW ZEALAND............................................................................ 17.5 7.8
PORTUGAL............................................................................... 11.8 10.0
SPAIN.................................................................................. 9.9 8.7
SWEDEN................................................................................. 14.4 11.0
SWITZERLAND............................................................................ 12.6 9.2
TURKEY................................................................................. 29.0 n/a
UNITED KINGDOM......................................................................... 13.8 11.2
UNITED STATES.......................................................................... 16.5 8.5
<FN>
- ------------------
N.A. indicates that the given country did not report information for the stated
age. 1991 data is the most recent available data.
</TABLE>
<TABLE>
<CAPTION>
TOTAL HEALTH CARE EXPENDITURES AS A
PERCENTAGE OF GDP
---------------------------------------
TOTAL TOTAL
EXPENDITURES IN EXPENDITURES AS A
COUNTRY $U.S. MILLIONS PERCENTAGE OF GDP
- ---------------------------------------------------------------------- --------------- ----------------------
<S> <C> <C>
AUSTRALIA............................................................. 25,920.3 8.6
AUSTRIA............................................................... 13,767.1 8.4
BELGIUM............................................................... 15,505.0 7.9
CANADA................................................................ 58,061.7 10.0
DENMARK............................................................... 8,501.7 6.5
FINLAND............................................................... 11,101.5 8.9
FRANCE................................................................ 108,634.8 9.1
GERMANY............................................................... 133,734.9 8.5
GREECE................................................................ 3,669.1 5.2
ICELAND............................................................... 543.7 8.4
IRELAND............................................................... 3,193.5 7.3
ITALY................................................................. 95,848.5 8.3
JAPAN................................................................. 223,048.3 6.6
LUXEMBOURG............................................................ 652.8 7.2
NETHERLANDS........................................................... 23,879.7 8.3
NORWAY................................................................ 8,179.0 7.6
NEW ZEALAND........................................................... 3,256.1 7.6
PORTUGAL.............................................................. 4,683.1 6.8
SPAIN................................................................. 35,119.8 6.7
SWEDEN................................................................ 20,429.8 8.6
SWITZERLAND........................................................... 18,321.7 7.9
TURKEY................................................................ 4,398.3 4.0
UNITED KINGDOM........................................................ 66,666.7 6.6
UNITED STATES......................................................... 751,771.0 13.4
<FN>
- ------------------
N.A. indicates that the given country did not report information for the stated
age. 1991 data is the most recent available data.
</TABLE>
Statement of Additional Information Page 55
<PAGE>
G.T. GLOBAL THEME FUNDS
<TABLE>
<CAPTION>
TOTAL HEALTH CARE
EXPENDITURES PER
CAPITA
--------------------
COUNTRY 1981 1991
- ------------------------------------------------------------------------------------------ --------- ---------
<S> <C> <C>
AUSTRALIA................................................................................. 909 1,495
AUSTRIA................................................................................... 721 1,760
BELGIUM................................................................................... 701 1,576
CANADA.................................................................................... 911 2,149
DENMARK................................................................................... 763 1,650
FINLAND................................................................................... 697 2,217
FRANCE.................................................................................... 846 1,904
GERMANY................................................................................... 958 2,088
GREECE.................................................................................... 171 357
ICELAND................................................................................... 970 2,091
IRELAND................................................................................... 468 907
ITALY..................................................................................... 484 1,659
JAPAN..................................................................................... 660 1,800
LUXEMBOURG................................................................................ 740 1,727
NETHERLANDS............................................................................... 814 1,585
NORWAY.................................................................................... 916 1,919
NEW ZEALAND............................................................................... 530 959
PORTUGAL.................................................................................. 156 475
SPAIN..................................................................................... 284 900
SWEDEN.................................................................................... 1,313 2,371
SWITZERLAND............................................................................... 1,083 2,671
TURKEY.................................................................................... 56 76
UNITED KINGDOM............................................................................ 546 1,162
UNITED STATES............................................................................. 1,222 2,867
<FN>
- ------------------
1991 data is the most recent available data.
</TABLE>
Statement of Additional Information Page 56
<PAGE>
G.T. GLOBAL THEME FUNDS
The following table compares GDP against the life expectancies in developed and
emerging markets. G.T. Global believes that the higher a country's GDP, the
higher the life expectancy of its population. Further, we believe developing
countries, particularly those in the Pacific Rim and Eastern Europe, represent
new markets for health care companies, as people in these regions gain the
resources for basic health care and begin to live longer.
GROSS DOMESTIC PRODUCT VS. LIFE EXPECTANCY
<TABLE>
<CAPTION>
GDP/CAPITA (US$) LIFE EXPECTANCY
---------------- ---------------
<S> <C> <C>
Japan....................................................... $29,485.78 79
U.S......................................................... $23,180.11 77
Germany..................................................... $22,199.27 76
Canada...................................................... $18,014.67 78
Australia................................................... $16,843.43 77
Singapore................................................... $16,437.50 75
UK.......................................................... $15,625.02 76
Spain....................................................... $14,701.89 77
Hong Kong................................................... $13,418.62 78
New Zealand................................................. $12,148.24 76
Portugal.................................................... $ 8,117.04 74
Argentina................................................... $ 6,911.75 71
South Korea................................................. $ 6,776.57 71
Greece...................................................... $ 6,531.84 77
Mexico...................................................... $ 3,870.72 70
Malaysia.................................................... $ 3,095.05 71
Chile....................................................... $ 3,029.63 72
Brazil...................................................... $ 2,341.81 66
Thailand.................................................... $ 1,902.36 69
Philippines................................................. $ 815.89 65
Indonesia................................................... $ 685.64 60
Pakistan.................................................... $ 351.25 59
Nigeria..................................................... $ 291.14 52
<FN>
- --------------
Source: World Development Report 1994, The World Bank, June 1994.
</TABLE>
Statement of Additional Information Page 57
<PAGE>
G.T. GLOBAL THEME FUNDS
The following table shows the growth in health care expenditures in the United
States for the 20-year period ended December 31, 1993.
<TABLE>
<CAPTION>
U.S. GDP
US HEALTH CARE EXPENDITURES (US$ HEALTH CARE EXPENDITURES AS A
YEAR U.S. CFI % CHANGE (US$ BILLIONS) BILLIONS) % OF GDP
----- ------------------- ----------------------------- ------------- -----------------------------
<S> <C> <C> <C> <C>
74 11.01 80.1 1,457.9 5%
75 9.18 93 1,584.8 6%
76 5.75 106.2 1,767 6%
77 6.48 122.4 1,974.1 6%
78 7.63 139.7 2,232.7 6%
79 11.24 157.8 2,488.6 6%
80 13.54 181.2 2,708 7%
81 10.36 213.6 3,030.6 7%
82 6.19 240.5 3,149.6 8%
83 3.22 265.7 3,405 8%
84 4.26 290.6 3,777.2 8%
85 3.55 319.3 4,038.7 8%
86 1.9 346.4 4,268.6 8%
87 3.66 384.7 4,539.9 8%
88 4.08 427.7 4,900.4 9%
89 4.83 471.9 8,250.8 9%
90 5.39 526.2 5,546.1 9%
91 4.25 577 5,722.9 10%
92 3.03 628.4 6,038.5 10%
93 2.96 680.6 6,374 11%
</TABLE>
From 1974 to 1993, health care expenditures as a share of GDP has doubled in the
U.S.
- --------------
Source: Datastream, February 4, 1994. Latest available data is December, 1993.
TELECOMMUNICATIONS FUND
From time to time the Fund and G.T. Global will quote information including data
regarding:
/ / Increased usage of new technologies such as, but not limited to,
cellular and wireless communications in emerging and established
countries around the world
The information quoted has not been independently verified by the Fund or G.T.
Global and will be based on data provided that is believed to be reliable and
accurate from but not limited to the following sources:
/ / Salomon Brothers World Equity Telecommunications Index, which includes
stock market data about the telecommunications industry in established
and developing markets
/ / OECD and other publications from its subsidiaries such as the
International Telecommunications Union
/ / Morgan Stanley Capital International stock market industry indices such
as Telecommunications, Broadcasting & Publishing and Data Processing &
Reproduction
/ / International Technology Consultants (ITC), a Washington D.C. based firm
which publishes reports such as EASTERN EUROPEAN & SOVIET TELECOM REPORT
and LATIN AMERICAN TELECOM REPORT
Statement of Additional Information Page 58
<PAGE>
G.T. GLOBAL THEME FUNDS
INFORMATION ABOUT THE TELECOMMUNICATIONS INDUSTRY
The Telecommunications Fund and G.T. Capital believe that certain political and
market factors merit an investor's consideration of a telecommunications
investment. In analyzing the telecommunications industry, G.T. Capital has
identified four areas that it expects will create investment opportunities. G.T.
Capital believes that deregulation of companies in the industry, which will
allow competition to promote greater efficiencies, privatization of state-owned
telecommunications businesses, development of infrastructure in underdeveloped
countries and upgrading of services in other countries, and emergence of
technologies that will enhance productivity and reduce costs in the
telecommunications industry, each will lead to growth in the sector. Of course,
there is no certainty that these factors will produce the anticipated results.
The following chart provides information on the key emerging trends as
identified by G.T. Capital, occurring in the telecommunications industry in some
of the world's countries.
<TABLE>
<S> <C> <C> <C> <C>
Infrastructure Privatization Deregulation New Technologies
------------- ------------ ------------ ----------------------------------
Argentina X X X
Brazil X X X
Canada X X
China X X X
France X
Germany X X X
Hong Kong X X X
Italy X X
Japan X X
Malaysia X X X
Mexico X X X
New Zealand X
Philippines X X X
Spain X X
Sweden X X
United Kingdom X X X
United States X X
</TABLE>
Statement of Additional Information Page 59
<PAGE>
G.T. GLOBAL THEME FUNDS
Moreover, according to G.T. Capital, the telecommunications industry
historically has proven to be a relatively non-cyclical industry that provides
goods and services to the public in periods of economic weakness as well as
economic strength. G.T. believes that the emerging economies around the world
lack access to basic telephone service. The following table illustrates the need
for basic telephone service outside the U.S based on telephone lines per 1,000
persons. G.T. Global believes that as a country's wealth, or GDP per capita
increases, more of a country's population demands access to basic telephone
service.
<TABLE>
<CAPTION>
TELEPHONE LINES/1,000 PERSONS
-----------------------------
<S> <C>
U.S......................................................... 545
Switzerland................................................. 587
Sweden...................................................... 683
Denmark..................................................... 566
Norway...................................................... 503
France...................................................... 495
Germany..................................................... 483
Finland..................................................... 535
Netherlands................................................. 464
Italy....................................................... 388
U.K......................................................... 442
Spain....................................................... 323
Portugal.................................................... 241
Greece...................................................... 391
Hungary..................................................... 96
Turkey...................................................... 123
Poland...................................................... 86
Japan....................................................... 441
Australia................................................... 456
Singapore................................................... 385
Hong Kong................................................... 434
New Zealand................................................. 437
South Korea................................................. 310
Malaysia.................................................... 89
Thailand.................................................... 24
Philippines................................................. 10
Indonesia................................................... 6
Argentina................................................... 96
Mexico...................................................... 66
Chile....................................................... 65
Brazil...................................................... 63
<FN>
- --------------
Source: The World Development Report 1994, The World Bank, June 1994.
</TABLE>
Statement of Additional Information Page 60
<PAGE>
G.T. GLOBAL THEME FUNDS
DEREGULATION IN THE UNITED STATES
The United States has been the bellwether for deregulation of the telephone
industry. The divestiture of the Bell System from American Telephone and
Telegraph has produced new competing companies in the United States. Such U.S.
market-driven competition has, for example, led to lower costs for consumers
which in turn led to greater consumer usage and to higher industrywide revenues.
G.T. Capital expects this scenario to continue to benefit such companies in the
U.S. and to similarly to be realized by the established telecommunications
companies in established economies, although no assurances can be made in this
regard. The information set forth below on the deregulation of long distance and
international telephone service carriers in the United States is based on a
study from a source that indicated the study would not be updated in the near
future. It is believed by G.T. Global, however, that although the study has not
been updated, G.T. Global believes the trend continues to be accurate.
<TABLE>
<S> <C> <C> <C> <C>
Growing Demand for Higher Industry
Telecommunications Revenue
Services
Deregulation Increased Lower Prices Greater Usage
Competition for Consumers
Extensive Regulation
and Lack of
Competition
</TABLE>
SOURCE: G.T. CAPITAL MANAGEMENT, INC.
Statement of Additional Information Page 61
<PAGE>
G.T. GLOBAL THEME FUNDS
INTERNATIONAL TELEPHONE SERVICE --
FALLING PRICES AND RISING USAGE LEADS TO HIGHER REVENUE
<TABLE>
<CAPTION>
REVENUE ($ PRICE
MILLIONS) PER MINUTE
----------- -----------
<S> <C> <C>
1975................................................................................. $ 576 $2.25
1976................................................................................. $ 679 $2.22
1977................................................................................. $ 807 $2.20
1978................................................................................. $ 977 $2.12
1979................................................................................. $ 1,122 $1.78
1980................................................................................. $ 2,097 $1.34
1981................................................................................. $ 2,239 $1.21
1982................................................................................. $ 2,382 $1.09
1983................................................................................. $ 2,876 $1.09
1984................................................................................. $ 3,197 $1.05
1985................................................................................. $ 3,487 $1.03
1986................................................................................. $ 4,004 $0.99
1987................................................................................. $ 4,750 $1.02
1988................................................................................. $ 5,800 $1.06
1989................................................................................. $ 6,901 $1.07
1990................................................................................. $ 8,042 $1.06
1991................................................................................. $ 9,096 $1.01
1992................................................................................. $ 10,179 $1.00
</TABLE>
WHILE THE PRICE PER MINUTE OF INTERNATIONAL TELEPHONE SERVICE HAS FALLEN, USAGE
HAS INCREASED, DRIVING TOTAL REVENUE FOR INTERNATIONAL TELEPHONE SERVICE UPWARD.
- --------------
Source: 1975 to 1979, Trends in the International Communications Industry,
1975-1990, Federal Communications Commission (FCC), October 4, 1991; 1980 to
1992, Trends in the International Communications Industry, Federal
Communications Commission (FCC), March 1994. From 1975 to 1979, the FCC report
classified calls between the continental U.S. and Hawaii and Puerto Rico as
overseas calls. This information is reflected in the data for that time period.
Statement of Additional Information Page 62
<PAGE>
G.T. GLOBAL THEME FUNDS
CELLULAR PHONE OWNERSHIP
<TABLE>
<CAPTION>
% OF POPULATION
OWNING A CELLULAR
PHONE
-----------------
<S> <C>
Hungary.................... 0.4%
Mexico..................... 0.4%
Chile...................... 0.6%
Venezuela.................. 0.8%
Japan...................... 1.6%
Germany.................... 2.2%
Taiwan..................... 2.6%
United Kingdom............. 3.8%
Hong Kong.................. 4.8%
Singapore.................. 5.8%
United States.............. 6.2%
Sweden..................... 9.0%
Finland.................... 9.3%
</TABLE>
From time to time G.T. Global and the Funds may discuss cellular data, such as,
but not limited to, the above for, but not limited to, these countries.
Source: TeleGeography 1994, TeleGeography, Inc., Washington, D.C., October 1994.
The following chart lists the top five financial services companies worldwide in
their respective industry.
<TABLE>
<S> <C>
COMMERCIAL BANKS
Fuji Bank................................................................................. Japan
Dai-Ichi Kangyo Bank...................................................................... Japan
Sumitomo Bank............................................................................. Japan
Sanwa Bank................................................................................ Japan
Sakura Bank............................................................................... Japan
DIVERSIFIED FINANCIAL SERVICE COMPANIES
Federal National Mortgage Association..................................................... U.S.
Salomon Brothers.......................................................................... U.S.
Ing Group................................................................................. Netherlands
Merrill Lynch............................................................................. U.S.
Axa....................................................................................... France
SAVINGS INSTITUTIONS
Abbey National............................................................................ UK
Halifax Building Society.................................................................. UK
La Caixa.................................................................................. Spain
Nationwide Anglia Building Society........................................................ UK
H.F. Ahmanson............................................................................. U.S.
LIFE INSURANCE COMPANIES
Nippon Life............................................................................... Japan
Dai-Ichi Mutual Life...................................................................... Japan
Sumitomo Life............................................................................. Japan
Prudential of America..................................................................... U.S.
Meiji Mutual Life......................................................................... Japan
</TABLE>
SOURCE: FORTUNE, "Fortune Guide To The Global Services 500," AUGUST 22, 1994.
- -C- 1994 TIME INC. ALL RIGHTS RESERVED. RANKING IS BY ASSET SIZE FOR 1993.
RANKINGS ARE SUBJECT TO CHANGE. REPRINTED WITH PERMISSION FROM FORTUNE. THERE
CAN BE NO ASSURANCE THE GLOBAL FINANCIAL SERVICES PORTFOLIO FUND WILL HOLD THE
SECURITIES OF THESE COMPANIES.
Statement of Additional Information Page 63
<PAGE>
G.T. GLOBAL THEME FUNDS
INFRASTRUCTURE FUND
The following table describes that in some Asian countries the demand for energy
is growing faster than the economy.
<TABLE>
<CAPTION>
ELECTRICITY
GDP GROWTH CONSUMPTION GROWTH
RATE (%) RATE (%)
----------------- -------------------
<S> <C> <C>
China.................. 9.3 8.7
Korea.................. 8.9 11.7
Thailand............... 8.4 12.3
Taiwan................. 8.1 8.5
Singapore.............. 6.5 8.4
Hong Kong.............. 6.5 8.9
Malaysia............... 6.2 12.3
Indonesia.............. 5.8 15.7
Pakistan............... 5.4 10.2
India.................. 5.2 11.0
Sri Lanka.............. 4.0 7.4
Philippines............ 0.6 4.6
</TABLE>
Source: Jardine Fleming, Asian Power Review, April 1994. Data from 1983-1992.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
PERCENT INCREASE OF PAVED ROADS (KM) FROM 1970 TO 1990
<S> <C>
South Korea 847%
Indonesia 453%
Thailand 313%
Pakistan 250%
Brazil 219%
Turkey 140%
India 134%
Singapore 128%
</TABLE>
Statement of Additional Information Page 64
<PAGE>
G.T. GLOBAL THEME FUNDS
G.T. GLOBAL CONSUMER PRODUCTS AND SERVICES FUND
From time to time the Fund and G.T. Global will quote information including, but
not limited to, data regarding:
/ / Trading volume, number of listed companies and the largest companies
located around the world in the consumer products and services
industries
/ / Expenditures, demand and consumption by various countries, regions,
income classes and age groups of consumer products and services
/ / Population of countries, regions and age groups
/ / Life expectancy rates in various regions, countries and age groups
/ / New consumer products and services in the development or manufacturing
stages
/ / Income of various regions, countries and age groups
/ / Sales and sales growth of consumer products and services companies in
their own country and abroad
/ / Sales, supply and demand of consumer products and services
/ / Parent Companies and the products and services they distribute
The information quoted will not be independently verified by the Fund or G.T.
Global and will be based on data provided that is believed to be reliable and
accurate from, but not limited to, the following sources:
/ / Consumer and trade groups
/ / Fortune magazine and other periodicals
/ / The World Bank and its publications
/ / The International Monetary Fund (IMF) and its publications
/ / The International Finance Corporation (IFC) and its publications
/ / The Organization for Economic Cooperation and Development (OECD) and its
publications
The following chart for the seven year period ended December 31, 1993
illustrates changes in per capita gross domestic product of developing and
developed countries.
RISING INCOME IN DEVELOPING ECONOMIES
PER CAPITA GDP (ANNUAL % CHANGE)
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
DEVELOPING COUNTRIES ESTABLISHED COUNTRIES
<S> <C> <C>
1986 2.5 2.2
1987 3.4 2.6
1988 4.7 3.8
1989 0.7 2.6
1990 1.9 1.6
1991 2.5 0.2
1992 3.3 0.8
1993 4.1 0.6
</TABLE>
IN DEVELOPING COUNTRIES, WE BELIEVE THAT RISING INCOMES ARE CREATING NOT ONLY A
NEW CLASS OF CONSUMERS BUT MORE MONEY TO SPEND ON PRODUCTS AND SERVICES.
SOURCES: WORLD ECONOMIC OUTLOOK OCTOBER 1994. INTERNATIONAL MONETARY FUND 1994.
Statement of Additional Information Page 65
<PAGE>
G.T. GLOBAL THEME FUNDS
IMPORTANT POINTS TO NOTE ABOUT THE ABOVE DATA RELATING TO WORLD EQUITY AND BOND
MARKET PERFORMANCE AND EQUITY MARKET DIVERSIFICATION
The information contained above relating to foreign market performance and
diversification 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 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
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. 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. Moreover, the Fund may invest a portion
of its assets in corporate bonds, while the above data relates only to
government bonds. Each of these factors will cause the performance of the Fund
to differ from the indices shown above.
- --------------------------------------------------------------------------------
DESCRIPTION OF DEBT RATINGS
- --------------------------------------------------------------------------------
DESCRIPTION OF COMMERCIAL PAPER RATINGS
MOODY'S INVESTORS SERVICE, INC. ("MOODY'S") employs the designations "Prime-1"
and "Prime-2" to indicate commercial paper having the highest capacity for
timely repayment. Issuers rated Prime-1 (or supporting institutions)have a
superior ability for repayment of short-term debt 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 protection; broad margins in earnings coverage of fixed
financial charges and high internal cash generation; and well-established access
to a range of financial markets and assured sources of alternate liquidity.
Issuers rated Prime-2 (or supporting institutions) have a strong ability for
repayment of short-term debt obligations. This normally will be evidenced by
many of the characteristics cited above, but to a lesser degree. Earnings trends
and coverage ratios, while sound, will be more subject to variation.
Capitalization characteristics, while still appropriate, may be more affected by
external conditions. Ample alternate liquidity is maintained.
STANDARD & POOR'S RATINGS GROUP'S ("S&P") rates commercial paper in four
categories ranging from "A-1" for the highest quality obligations to "D" for the
lowest. A-1 -- This highest category indicates that the degree of safety
regarding timely payment is strong. Those issues determined to possess extremely
strong safety characteristics will be denoted with a plus sign (+) designation.
A-2 -- Capacity for timely payment on issues with this designation is
satisfactory. If, however, the relative degree of safety is not as high as for
issues designated "A-1." A-3 -- Issues carrying this designation have adequate
capacity for timely payment. They are, however, more vulnerable to the adverse
effects of changes in circumstances than obligations carrying the higher
designations. B -- Issues rated "B" are regarded as having only speculative
capacity for timely payment. C -- This rating is assigned to short-term debt
obligations with a doubtful capacity for payment. D -- Debt rated "D" is in
payment default. The "D" 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.
Statement of Additional Information Page 66
<PAGE>
G.T. GLOBAL THEME FUNDS
DESCRIPTION OF BOND RATINGS
MOODY'S rates the long-term debt securities issued by various entities from
"Aaa" to "C." Investment Grade Ratings are the first four categories:
Aaa -- Best quality. These securities carry the smallest degree of
investment risk and are generally referred to as "gilt edged." Interest
payments are protected by a large, or by an exceptionally stable, margin and
principal is secure. While the various protective elements are likely to
change, such changes as can be visualized are most unlikely to impair the
fundamentally strong position of such issues.
Aa -- High quality by all standards. Together with the Aaa group, they
comprise what are generally known as high grade bonds. They are rated lower
than the best bonds because margins of protection may not be as large as in
Aaa securities or fluctuation of protective elements may be of greater
amplitude or other elements may be 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 -- Have speculative elements and their future cannot be considered to
be well-assured. Often the protection of interest and principal payments may
be very moderate and thereby not well safeguarded during both good and bad
times over the future. Uncertainty of position characterizes bonds in this
class.
B -- 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 -- Poor standing. Such issues may be in default or there may be
present elements of danger with respect to principal or interest.
Ca -- Speculative in a high degree. Such issues are often in default or
have other marked shortcomings.
C -- Lowest rated class of bonds. Issues so rated can be regarded as
having extremely poor prospects of ever attaining any real investment
standing.
ABSENCE OF RATING: Where no rating has been assigned or where a rating has been
suspended or withdrawn, it may be for reasons unrelated to the quality of the
issue.
Should no rating be assigned, the reason may be one of the following:
1. An application for rating was not received or accepted.
2. The issue or issuer belongs to a group of securities or companies
that are not rated as a matter of policy.
3. There is a lack of essential data opertaining to the issue or
issuer.
4. The issue was privately placed, in which case the rating is not
published in Moody's publications.
Suspension or withdrawal may occur if new and material circumstances arise, the
effects of which preclude satisfactory analysis; if there is no longer available
reasonable up-to-date data to permit a judgement to be formed; if a bond is
called for redemption; or for other reasons.
Note: Moody's applies numerical modifiers 1, 2 and 3 in each generic rating
classification from Aa to B in its corporate bond rating system. The modifier 1
indicates that the security ranks in the higher end of its generic rating
category; the modifier 2 indicates a mid-range ranking; and the modifier 3
indicates that the issue ranks in the lower end of its generic rating category.
S&P rates the securities debt of various entities in categories ranging from
"AAA" to "D" according to quality. Investment grade ratings are the first four
categories:
AAA -- Highest rating. Capacity to pay interest and repay principal is
extremely strong.
AA -- Very strong capacity to pay interest and repay principal and
differs from the higher rated issues only in a small degree.
Statement of Additional Information Page 67
<PAGE>
G.T. GLOBAL THEME FUNDS
A -- Has a strong capacity to pay interest and repay principal although
it is somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than debt in higher rated categories.
BBB -- Regarded as having adequate capacity to pay interest and repay
principal. Whereas it normally exhibits adequate protection parameters,
adverse economic conditions or changing circumstances are more likely to
lead to a weakened capacity to pay interest and repay principal for debt in
this category than in higher rated categories.
BB, B, CCC, CC, C -- Debt rated "BB," "B," "CCC," "CC," and "C" is
regarded, on balance, as predominantly speculative with respect to capacity
to pay interest and repay principal in accordance with the terms of the
obligation. "BB" 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.
BB -- Has less near-term vulnerability to default than other speculative
issues. However, it faces 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. The "BB" rating
category is also used for debt subordinated to senior debt that is assigned
an actual or implied "BBB-" rating.
B -- Has a greater vulnerability to default but currently has 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. The "B" rating category is
also used for debt subordinated to senior debt that is assigned an actual or
implied "BB" or "BB-" rating.
CCC -- Has a currently identifiable vulnerability to default and is
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, it is 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 -- Typically applied to debt subordinated to senior debt that is
assigned an actual or implied "CCC" rating.
C -- Typically applied to debt subordinated to senior debt that is
assigned an actual or implied "CCC-" debt rating. The "C" rating may be used
to cover a situation where a bankruptcy petition has been filed, but debt
service payments are continued.
C1 -- Reserved for income bonds on which no interest is being paid.
D -- In payment default. The "D" 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 will also be used up on the
filing of a bankruptcy petition if debt service payments are jeopardized.
PLUS (+) OR MINUS (-): The ratings from "AA" to "CCC" may be modified by the
addition of a plus or minus sign to show relative standing within the major
rating categories.
NR: Indicates that no public rating has been requested, that there is
insufficient information on which to base a rating, or that S&P does not rate a
particular type of obligation as a matter of policy.
- --------------------------------------------------------------------------------
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
The audited financial statements of Health Care Fund, Telecommunications Fund,
Financial Services Fund, Infrastructure Fund and Natural Resources Fund at
October 31, 1994, and for the year then ended, the audited financial statement
of Consumer Products and Services Fund at December 20, 1994, and the unaudited
financial statements of Consumer Products and Services Fund at April 30, 1995
appear on the following pages.
Statement of Additional Information Page 68
<PAGE>
G.T. GLOBAL FINANCIAL SERVICES 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 Financial Services Fund, one of the funds organized as a series of G.T.
Investment Funds, Inc., as of October 31, 1994 and the related statement of
operations, the statement of changes in net assets and the financial highlights
for the period from May 31, 1994 (commencement of operations) to October 31,
1994. 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
audit.
We conducted our audit 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. 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
audit provides 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 Financial Services Fund as of October 31, 1994, and the results of
its operations, the changes in its net assets and the financial highlights for
the period from May 31, 1994 (commencement of operations) to October 31, 1994,
in conformity with generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
BOSTON, MASSACHUSETTS
DECEMBER 16, 1994
Statement of Additional Information Page 69
<PAGE>
G.T. GLOBAL FINANCIAL SERVICES FUND
STATEMENT OF ASSETS
AND LIABILITIES
October 31, 1994
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Assets:
<S> <C>
Investments in Global Financial Services Portfolio (cost $5,148,440) (Note 1)..........................
$5,175,735
Receivable for expense reimbursement (Note 2)..........................................................
96,844
Receivable for Fund shares sold........................................................................
143,492
Unamortized deferred organizational expenses (Note 1)..................................................
57,842
----------
Total assets...........................................................................................
5,473,913
----------
Liabilities:
Payable for Fund shares repurchased....................................................................
19,103
Payable for registration fees..........................................................................
13,285
Payable for professional fees..........................................................................
10,766
Payable for printing and postage expenses..............................................................
10,392
Payable for service and distribution expenses (Note 2).................................................
2,993
Payable for transfer agent fees (Note 2)...............................................................
2,044
Payable for custodian fees.............................................................................
1,800
Payable for Administration fees (Note 2)...............................................................
1,087
Payable for Directors' fees (Note 2)...................................................................
1,014
Accrued expenses.......................................................................................
1,427
----------
Total liabilities......................................................................................
63,911
----------
Net assets...............................................................................................
$5,410,002
----------
----------
Class A:
Net asset value and redemption price per share
($3,175,149 DIVIDED BY 273,195 shares outstanding)......................................................
$ 11.62
----------
----------
Maximum offering price per share
(100/95.25 of $11.62)*..................................................................................
$ 12.20
----------
----------
Class B:+
Net asset value and offering price per share
($2,234,853 DIVIDED BY 192,711 shares outstanding)......................................................
$ 11.60
----------
----------
Net assets consist of:
Paid in capital (Note 4)...............................................................................
$5,404,049
Undistributed net investment income....................................................................
5,694
Accumulated net realized loss on investments and foreign currency conversions --
Global Financial Services Portfolio...................................................................
(32,440)
Net unrealized appreciation of investments -- Global Financial Services Portfolio......................
32,699
----------
Total -- representing net assets applicable to capital shares outstanding..............................
$5,410,002
----------
----------
<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 70
<PAGE>
G.T. GLOBAL FINANCIAL SERVICES FUND
STATEMENT OF OPERATIONS
May 31, 1994 (commencement of operations) to October 31, 1994
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Investment income (Note 1):
Dividend income -- Global Financial Services Portfolio................................................... $ 23,933
Interest income -- Global Financial Services Portfolio................................................... 13,042
---------
Total investment income.................................................................................. 36,975
---------
Expenses:
Expenses -- Global Financial Services Portfolio.......................................................... 50,670
Professional fees........................................................................................ 20,890
Transfer agent fees (Note 2)............................................................................. 15,637
Printing and postage expenses............................................................................ 10,623
Service and distribution expenses (Note 2):
Class A..................................................................................... $ 3,860
Class B..................................................................................... 4,398 8,258
---------
Registration fees........................................................................................ 5,300
Amortization of organizational expenses (Note 1)......................................................... 5,258
Directors' fees (Note 2)................................................................................. 5,090
Administration fees (Note 2)............................................................................. 3,029
Custodian fees........................................................................................... 1,840
Other.................................................................................................... 1,530
---------
Total expenses before expense reimbursement.............................................................. 128,125
Less expense reimbursement (Note 2)...................................................................... (96,844)
---------
Total expenses........................................................................................... 31,281
---------
Net investment income...................................................................................... 5,694
---------
Net realized and unrealized gain (loss) on investments and foreign currencies (Note 1):
Net realized loss on investments -- Global Financial Services Portfolio....................... (25,821)
Net realized loss on foreign currency conversions -- Global Financial Services Portfolio...... (6,619)
---------
Net realized loss........................................................................................ (32,440)
Increase in unrealized appreciation of investments -- Global Financial Services Portfolio................ 32,699
---------
Net realized and unrealized gain on investments and foreign currency conversions -- Global Financial
Services Portfolio........................................................................................ 259
---------
Net increase in net assets resulting from operations....................................................... $ 5,953
---------
---------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 71
<PAGE>
G.T. GLOBAL FINANCIAL SERVICES FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MAY 31, 1994
(COMMENCEMENT OF OPERATIONS)
TO OCTOBER 31, 1994
-----------------------------
<S> <C>
Increase in net assets
Operations:
Net investment income..............................................................................
$ 5,694
Net realized loss on investments and foreign currency conversions..................................
(32,440)
Increase in unrealized appreciation of investments.................................................
32,699
-----------
Net increase in net assets resulting from operations...............................................
5,953
Capital Share Transactions (Note 3):
Increase from shares sold..........................................................................
5,652,003
Decrease from shares repurchased...................................................................
(347,954)
-----------
Net increase from capital shares transactions......................................................
5,304,049
-----------
Total increase in net assets.........................................................................
5,310,002
Net assets:
Beginning of period................................................................................
100,000
-----------
End of period......................................................................................
$ 5,410,002*
-----------
-----------
<FN>
- ----------------
* Includes undistributed net investment income of $5,694.
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 72
<PAGE>
G.T. GLOBAL FINANCIAL SERVICES FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout the period, total investment return, ratios and supplemental data
throughout the period. This information has been derived from information
provided in the financial statements.
<TABLE>
<CAPTION>
CLASS A CLASS B
MAY 31, 1994 MAY 31, 1994
(COMMENCEMENT OF OPERATIONS) (COMMENCEMENT OF OPERATIONS)
TO TO
OCTOBER 31, 1994 OCTOBER 31, 1994
----------------------------- -----------------------------
<S> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period................................. $ 11.43 $ 11.43
------- -------
Income from investment operations:
Net investment income.............................................. 0.02* 0.00*
Net realized and unrealized gain on investments and foreign
currency conversions.............................................. 0.17** 0.17**
------- -------
Net increase resulting from investment operations.................. 0.19 0.17
------- -------
Net asset value, end of period....................................... $ 11.62 $ 11.60
------- -------
------- -------
Total investment return (c).......................................... 1.66%(b) 1.49%(b)
Ratios and supplemental data:
Net assets, end of period (in 000's)............................... $ 3,175 $ 2,235
Ratio of net investment income to average net assets............... 0.66%(a)* 0.16%(a)*
Ratio of net expenses to average net assets........................ 2.40%(a)* 2.90%(a)*
<FN>
- ----------------
(a) Annualized.
(b) Not annualized.
(c) Total investment return does not include sales charges.
* The annualized ratios of operating expenses and net investment income to
average net assets for Class A and Class B before reimbursement by G.T.
Capital Management, Inc. for the period ended October 31, 1994 would have
been 10.32% and (7.26)%; and 10.82% and (7.76)%, respectively. The net
investment income per share would have been reduced by $0.23 for each
class.
** The per share amount does not correspond with the net realized and
unrealized gain for the period due to the timing of the sales of Fund
shares and the amount of per share realized and unrealized gains and losses
at such time.
</TABLE>
Statement of Additional Information Page 73
<PAGE>
G.T. GLOBAL FINANCIAL SERVICES FUND
NOTES TO
FINANCIAL STATEMENTS
October 31, 1994
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
G.T. Global Financial Services 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 Fund invests substantially all of
its investable assets in Global Financial Services Portfolio ("Portfolio"),
which is registered as an open-end management investment company under the 1940
Act and has investment objectives, policies and limitations substantially
identical to those of the Fund. The value of the Fund's investment in the
Portfolio reflects the Fund's proportionate interest in the net assets of the
Portfolio. The financial statements of the Portfolio, including the Portfolio of
Investments, are included elsewhere in this Report and should be read in
conjunction with the Fund's financial statements.
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) INVESTMENT VALUATION
Valuation of securities and other investment practices by the Portfolio are
discussed in Note 1 of the Portfolio's Notes to Financial Statements which are
included elsewhere in this Report.
(B) 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. The Fund currently has a capital loss carryforward of $22,442
which expires in 2002.
(C) DISTRIBUTION 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 Portfolio and timing differences.
(D) 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 $63,500. These expenses
are being amortized on a straightline basis over a five-year period.
2. RELATED PARTIES
G.T. Capital Management, Inc. ("G.T. Capital") is the Fund's administrator. The
Fund pays administration fees to G.T. Capital at the annualized rate of 0.25% of
the Fund's average daily net assets. 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 items) 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 period ended October 31, 1994, G.T. Global retained
$4,672 of such sales charges. G.T. Global also makes ongoing shareholder
servicing and trail commission payments to dealers whose clients hold Class A
shares.
Statement of Additional Information Page 74
<PAGE>
G.T. GLOBAL FINANCIAL SERVICES FUND
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 period ended October 31,
1994, G.T. Global collected CDSCs in the amount of $847. 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 plans of distribution 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 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.
Statement of Additional Information Page 75
<PAGE>
G.T. GLOBAL FINANCIAL SERVICES FUND
3. 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
Emerging Markets 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
Strategic Income 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 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>
MAY 31, 1994
(COMMENCEMENT OF
OPERATIONS)
TO OCTOBER 31, 1994
---------------------
CLASS A SHARES AMOUNT
- ---------------------------------------------------------------------------------------------------- --------- ----------
<S> <C> <C>
Shares sold......................................................................................... 288,905 $3,352,036
Shares repurchased.................................................................................. (20,084) (233,975)
--------- ----------
Net increase........................................................................................ 268,821 $3,118,061
--------- ----------
--------- ----------
<CAPTION>
MAY 31, 1994
(COMMENCEMENT OF
OPERATIONS)
TO OCTOBER 31, 1994
---------------------
CLASS B SHARES AMOUNT
- ---------------------------------------------------------------------------------------------------- --------- ----------
<S> <C> <C>
Shares sold......................................................................................... 198,242 $2,299,967
Shares repurchased.................................................................................. (9,906) (113,979)
--------- ----------
Net increase........................................................................................ 188,336 $2,185,988
--------- ----------
--------- ----------
</TABLE>
Statement of Additional Information Page 76
<PAGE>
GLOBAL FINANCIAL SERVICES PORTFOLIO
REPORT OF
INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
ANNUAL REPORT
To the Shareholders and Board of Trustees of
Global Financial Services Portfolio:
We have audited the accompanying statement of assets and liabilities of Global
Financial Services Portfolio, including the schedule of portfolio investments,
as of October 31, 1994 and the related statement of operations, statement of
changes in net assets and supplementary data for the period from May 31, 1994
(commencement of operations) to October 31, 1994. These financial statements and
the supplementary data are the responsibility of the Portfolio's management. Our
responsibility is to express an opinion on these financial statements and the
supplementary data based on our audit.
We conducted our audit 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 supplementary data 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. 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
audit provides a reasonable basis for our opinion.
In our opinion, the financial statements and the supplementary data referred to
above present fairly, in all material respects, the financial position of Global
Financial Services Portfolio as of October 31, 1994 and the results of its
operations, the changes in its net assets and the supplementary data for the
period from May 31, 1994 (commencement of operations) to October 31, 1994, in
conformity with generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
BOSTON, MASSACHUSETTS
DECEMBER 16, 1994
Statement of Additional Information Page 77
<PAGE>
GLOBAL FINANCIAL SERVICES PORTFOLIO
PORTFOLIO OF INVESTMENTS
October 31, 1994
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Equity Market % of Net
Investments Country Shares Value Assets(a)
<S> <C> <C> <C> <C>
- --------------------------------------------------------------------
Banks-Regional (50.6%)
- ----------------------------------------
Bank of Ireland IRL 59,500 $274,493 5.3
BayBanks, Inc. US 4,400 254,100 4.8
Banco
Commercial
S.A. 144A ADR
(b)(c)(d) URGY 12,000 238,500 4.6
Amalgamated
Banks of South
Africa S AFR 90,900 232,350 4.5
Banco Nacional
S.A.
(Preferred) BRZL 7,500,000 204,203 3.9
The Thai
Farmers Bank,
Ltd. (Foreign) THAI 22,500 198,636 3.8
West One
Bancorp US 7,000 192,500 3.7
Bangkok Bank
Public Co.
Ltd. (Foreign) THAI 14,700 159,270 3.1
Uniao Bancos
Brasileiros -
Unibanco
(Preferred
"A") BRZL 5,000,000 158,170 3.1
Mellon Bank
Corporation US 2,000 111,250 2.1
Banco Wiese ADR
(b)(c) PERU 5,000 106,250 2.1
Grupo
Financiero
Banamex
Accival, S.A.
de C.V. "C" MEX 14,000 96,270 1.9
Den Danske Bank DEN 1,500 80,599 1.6
Benson
Financial
Corporation
(c) US 6,000 72,000 1.4
Westpac Banking
Corporation
Ltd. AUSL 20,000 67,167 1.3
<CAPTION>
Equity Market % of Net
Investments Country Shares Value Assets(a)
<S> <C> <C> <C> <C>
- --------------------------------------------------------------------
Banco Bradesco
de
Investimento
S.A.
(Preferred) BRZL 6,200,000 $58,032 1.1
Zions Bancor-
poration US 1,500 56,438 1.1
Unidanmark AS
"A" DEN 1,300 52,168 1.0
Glacier
Bancorp, Inc. US 500 8,875 0.2
------------
2,621,271
------------
Other Financial (14.3%)
- ----------------------------------------
House of
Investments,
Inc. PHIL 128,000 268,387 5.2
First Data
Corporation US 4,100 205,513 4.0
Dean Witter
Discover and
Company US 3,000 115,875 2.2
Transaction
Network
Service (c) US 6,000 78,750 1.5
First Financial
Caribbean
Corporation US 6,400 73,600 1.4
------------
742,125
------------
Real Estate Investment Trust (10.9%)
- ----------------------------------------
Evans
Withycombe
Residential,
Inc. US 13,000 256,750 5.0
JP Realty Inc. US 7,700 151,113 2.9
Alexander
Haagen
Properties,
Inc. US 5,300 85,463 1.6
Macerich
Company (The) US 2,600 52,000 1.0
Shugard Storage
Centers, Inc.
"A" US 1,000 21,250 0.4
------------
566,576
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 78
<PAGE>
GLOBAL FINANCIAL SERVICES PORTFOLIO
<TABLE>
<CAPTION>
Equity Market % of Net
Investments Country Shares Value Assets(a)
- --------------------------------------------------------------------
<S> <C> <C> <C> <C>
Banks-Super Regional (8.5%)
- ----------------------------------------
First
Interstate
Bancorp US 3,000 $240,000 4.7
BankAmerica
Corporation US 2,500 108,750 2.1
Banc One
Corporation US 3,000 86,625 1.7
------------
435,375
------------
Banks-Money Center (3.7%)
- ----------------------------------------
National
Westminster
Bank PLC UK 14,800 121,760 2.3
Citicorp US 1,500 71,625 1.4
------------
193,385
------------
Country Funds (2.7%)
- ----------------------------------------
Korean
Investment
Fund, Inc.
(b)(c) KOR 3,400 46,750 0.9
Korea Fund,
Inc. (b) KOR 1,900 46,075 0.9
Korea Equity
Fund (b)(c) KOR 4,700 45,238 0.9
------------
138,063
------------
<CAPTION>
Equity Market % of Net
Investments Country Shares Value Assets(a)
<S> <C> <C> <C> <C>
- --------------------------------------------------------------------
Investment Management (2.5%)
- ----------------------------------------
M & G Group PLC UK 3,500 $54,999 1.1
Franklin
Resources,
Inc. US 1,000 40,875 0.8
Eaton Vance
Corporation US 1,000 31,625 0.6
------------
127,499
------------
Consumer Finance (2.1%)
- ----------------------------------------
Green Tree
Financial
Corporation US 4,000 109,500 2.1
Insurance-Life (1.5%)
- ----------------------------------------
Kemper
Corporation US 1,500 78,375 1.5
- --------------------------------------------------------------------
- --------------------------------------------------------------------
Total Equity Investments
(cost $4,979,479)*..................... 5,012,169 96.8
Other Assets Less Liabilities........... 163,666 3.2
- --------------------------------------------------------------------
- --------------------------------------------------------------------
Net Assets.............................. $5,175,835 100.0
- --------------------------------------------------------------------
- --------------------------------------------------------------------
<FN>
- --------------------------------------------------------------------------------
(a) Percentages indicated are based on net assets of $5,175,835.
(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.
Abbreviation:
ADR -- American Depository Receipt
* For Federal income tax purposes, cost is $4,982,857 and appreciation
(depreciation) of securities is as follows:
Unrealized appreciation: $ 189,457
Unrealized depreciation: (160,145)
---------
Net unrealized
appreciation: $ 29,312
---------
---------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 79
<PAGE>
GLOBAL FINANCIAL SERVICES PORTFOLIO
The Fund's portfolio of investments at October 31, 1994, was concentrated in the
following countries:
<TABLE>
<CAPTION>
Percentage of Net Assets(a)
-----------------------------------
Country Equity Other Total
- ----------------------------------- ----------- ----------- ---------
<S> <C> <C> <C>
Australia 1.3 1.3
Brazil 8.1 8.1
Denmark 2.6 2.6
Ireland 5.3 5.3
Korea 2.7 2.7
Mexico 1.9 1.9
Peru 2.1 2.1
Philippines 5.2 5.2
South Africa 4.5 4.5
Thailand 6.9 6.9
UK 3.4 3.4
U.S. 48.2 3.2 51.4
Uruguay 4.6 4.6
--- --- ---------
Total 96.8 3.2 100.0
--- --- ---------
--- --- ---------
<FN>
- ----------------
(a) Percentages indicated are based on net assets of $5,175,835.
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 80
<PAGE>
GLOBAL FINANCIAL SERVICES PORTFOLIO
STATEMENT OF ASSETS
AND LIABILITIES
October 31, 1994
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Assets:
Investments in securities, at value (cost $4,979,479) (Note 1).........................................
$5,012,169
Foreign Currency (cost $767)...........................................................................
774
Receivable for securities sold.........................................................................
237,232
Unamortized deferred organizational expenses (Note 1)..................................................
22,917
Dividends receivable...................................................................................
9,501
Cash held as collateral for securities loaned (Note 1).................................................
48,000
----------
Total assets...........................................................................................
5,330,593
----------
Liabilities:
Due to Custodian.......................................................................................
54,321
Payable for deferred organizational expenses...........................................................
25,000
Payable for professional fees..........................................................................
11,889
Payable for printing and postage expenses..............................................................
5,757
Payable for investment management and administration fees (Note 2).....................................
4,293
Payable for Trustees' fees (Note 2)....................................................................
2,141
Accrued expenses.......................................................................................
3,357
Collateral for securities loaned (Note 1)..............................................................
48,000
----------
Total liabilities......................................................................................
154,758
----------
Net assets...............................................................................................
$5,175,835
----------
----------
Net assets consist of:
Paid in capital........................................................................................
$5,189,271
Accumulated net investment loss........................................................................
(13,695)
Accumulated net realized loss on investments and foreign currency conversions..........................
(32,440)
Net unrealized appreciation of investments.............................................................
32,699
----------
Total -- representing net assets applicable to shares of beneficial interest outstanding...............
$5,175,835
----------
----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 81
<PAGE>
GLOBAL FINANCIAL SERVICES PORTFOLIO
STATEMENT OF OPERATIONS
May 31, 1994 (commencement of operations) to October 31, 1994
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Investment income (Note 1):
Dividends................................................................................................. $ 23,933
Interest.................................................................................................. 13,042
---------
Total investment income................................................................................... 36,975
---------
Expenses:
Professional fees......................................................................................... 20,370
Investment management and administration fees (Note 2).................................................... 8,249
Custodian fees............................................................................................ 7,880
Printing and postage expenses............................................................................. 7,650
Trustees' fees (Note 2)................................................................................... 2,908
Amortization of organizational expenses (Note 1).......................................................... 2,083
Other..................................................................................................... 1,530
---------
Total expenses............................................................................................ 50,670
---------
Net investment loss......................................................................................... (13,695)
---------
Net realized and unrealized gain (loss) on investments and foreign currencies (Note 1):
Net realized loss on investments............................................................... $ (25,821)
Net realized loss on foreign currency conversions.............................................. (6,619)
---------
Net realized loss......................................................................................... (32,440)
Increase in unrealized appreciation on investments........................................................ 32,699
---------
Net realized and unrealized gain on investments and foreign currency conversions............................ 259
---------
Net decrease in net assets resulting from operations........................................................ $ (13,436)
---------
---------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 82
<PAGE>
GLOBAL FINANCIAL SERVICES PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MAY 31, 1994
(COMMENCEMENT OF OPERATIONS)
TO OCTOBER 31, 1994
-----------------------------
<S> <C>
Increase in net assets
Operations:
Net investment loss................................................................................
$ (13,695)
Net realized loss on investments and foreign currency conversions..................................
(32,440)
Increase in unrealized appreciation of investments.................................................
32,699
-----------
Net decrease in net asssets resulting from operations..............................................
(13,436)
Beneficial interest transactions:
Contributions......................................................................................
5,089,171
Withdrawals........................................................................................
0
-----------
Net increase from beneficial interest transactions.................................................
5,089,171
-----------
Total increase in net assets.........................................................................
5,075,735
Net assets:
Beginning of period................................................................................
100,100
-----------
End of period*.....................................................................................
$ 5,175,835
-----------
-----------
<FN>
- ----------------
* Includes accumulated net investment loss of $(13,695).
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 83
<PAGE>
GLOBAL FINANCIAL SERVICES PORTFOLIO
SUPPLEMENTARY DATA
- --------------------------------------------------------------------------------
Contained below are ratios and supplemental data that have been derived from
information provided in the financial statements.
<TABLE>
<CAPTION>
MAY 31, 1994
(COMMENCEMENT OF OPERATIONS)
TO OCTOBER 31, 1994
-----------------------------
<S> <C>
Ratios and supplemental data:
Net assets, end of period (in 000's)................................................................. $ 5,176
Ratio of net investment income to average net assets................................................. 1.19%(a)
Ratio of operating expenses to average net assets.................................................... 4.43%(a)
Portfolio turnover rate.............................................................................. 53%
<FN>
- ----------------
(a) Annualized.
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 84
<PAGE>
GLOBAL FINANCIAL SERVICES PORTFOLIO
NOTES TO
FINANCIAL STATEMENTS
October 31, 1994
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
Global Financial Services Portfolio ("Portfolio") is organized as a New York
Trust and is registered under the Investment Company Act of 1940, as amended
("1940 Act"), as a non-diversified, open-end management investment company. The
following is a summary of significant accounting policies consistently followed
by the Portfolio in the preparation of the financial statements. The policies
are in conformity with generally accepted accounting principles.
(A) PORTFOLIO VALUATION
The Portfolio calculates the net asset value of and completes orders to
purchase, exchange or repurchase Portfolio shares of beneficial interest 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
Portfolio's Board of Trustees.
Portfolio securities which are primarily traded on foreign exchanges are
generally valued at the preceding closing values of such securities on their
respective exchanges, and those values are then translated into U.S. dollars at
the current exchange 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 Portfolio's Board of Trustees.
(B) FOREIGN CURRENCY TRANSLATION
The accounting records of the Portfolio 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 Portfolio 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.
In addition, the Portfolio may focus its investments in certain related
financial services, subjecting the Portfolio to greater risk than a fund that is
more diversified.
Statement of Additional Information Page 85
<PAGE>
GLOBAL FINANCIAL SERVICES PORTFOLIO
(C) REPURCHASE AGREEMENTS
With respect to repurchase agreements entered into by the Portfolio, it is the
Portfolio's policy to always receive, as collateral, United States government
securities or other high quality debt securities of which the value, including
accrued interest, is at least equal to the amount to be paid to the Portfolio
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 Portfolio as an unrealized gain or loss. When the Forward is closed, the
Portfolio 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
Portfolio 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
Portfolio 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 Portfolio writes a call or put option, an amount equal to the premium
received is included in the Portfolio's "Statement of Assets and Liabilities" as
an asset and an equivalent liability. The amount of the liability is
subsequently marked-to-market to reflect the current market value of the option.
The current market value of an option listed on a traded exchange is valued at
its last 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 Portfolio enters into a closing purchase
transaction, a gain or loss is realized without regard to any unrealized gain or
loss on the underlying security, and the liability related to such option is
extinguished. If a written call option is exercised, a gain or loss is realized
from the sale of the underlying security and the proceeds of the sale are
increased by the premium originally received. If a written put option is
exercised, the cost of the underlying security purchased would be decreased by
the premium originally received. The Portfolio can write options only on a
covered basis, which for a call requires that the Portfolio holds the underlying
security and for a put requires the Portfolio to set aside cash, U.S. government
securities or other liquid, high-grade debt securities in an amount not less
than the exercise price or otherwise provide adequate cover at all times while
the put option is outstanding. At October 31, 1994, the Portfolio had no written
options.
The premium paid by the Portfolio for the purchase of a call or put option is
included in the Portfolio's "Statement of Assets and Liabilities" as an
investment and subsequently "marked-to-market" to reflect the current market
value of the option. If an option which the Portfolio has purchased expires on
the stipulated expiration date, the Portfolio realizes a loss in the amount of
the cost of the option. If the Portfolio enters into a closing sale transaction,
the Portfolio realizes a gain or loss, depending on whether proceeds from the
closing sale transaction are greater or less than the cost of the option. If the
Portfolio exercises a call option, the cost of the securities acquired by
exercising the call is increased by the premium paid to buy the call. If the
Portfolio exercises a put option, it realizes a gain or loss from the sale of
the underlying security, and the proceeds from such sale are decreased by the
premium originally paid. At October 31, 1994, the Portfolio had no outstanding
purchased options.
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
Portfolio is required to pledge to the broker an amount of cash or securities
equal to the minimum "initial margin" requirements of the exchange on which the
contract is traded. Pursuant to the contract, the Portfolio agrees to receive
from or pay to the broker an amount of cash equal to the daily fluctuation in
value of the contract. Such receipts or payments are known as "variation margin"
and are recorded by the Portfolio as unrealized gains or losses. When the
contract is closed, the Portfolio records a realized gain or loss equal to the
difference between the value of the contract at the time it was opened and the
value at the time it was closed. The potential risk to the Portfolio is that the
change in value of the underlying securities may not correlate to the change in
value of the contracts. At October 31, 1994, the Portfolio did not hold futures
contracts.
Statement of Additional Information Page 86
<PAGE>
GLOBAL FINANCIAL SERVICES PORTFOLIO
(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. 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 Portfolio may trade securities on other than normal
settlement terms. This may increase the risk if the other party to the
transaction fails to deliver and causes the Portfolio to subsequently invest at
less advantageous prices.
(H) PORTFOLIO SECURITIES LOANED
At October 31, 1994, stocks with an aggregate value of approximately $47,400
were on loan to brokers. The loans were secured by cash collateral of $48,000.
For international securities, cash collateral is received by the Portfolio
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 Portfolio against loaned securities in the amount
at least equal to 102% of the market value of the loaned securities at the
inception of each loan. This collateral must be maintained at not less than 100%
of the market value of the loaned securities during the period of the loan. For
the period ended October 31, 1994, the Portfolio received $50 of income from
securities lending which was used to offset the Portfolio's custody expenses.
(I) TAXES
It is the policy of the Portfolio to meet the requirements of the Internal
Revenue Code of 1986, as amended ("Code"). Therefore, no provision has been made
for Federal taxes on income, capital gains, or unrealized appreciation of
securities held.
(J) DEFERRED ORGANIZATIONAL EXPENSES
Expenses incurred by the Portfolio 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 $25,000. These expenses
are being amortized on a straightline basis over a five-year period.
(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 Portfolio'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.
(L) INDEXED SECURITIES
The Portfolio may invest in indexed securities whose value is linked either
directly or indirectly to changes in foreign currencies, interest rates,
equities, indices, or other reference instruments. Indexed securities may be
more volatile than the reference instrument itself, but any loss is limited to
the amount of the original investment.
2. RELATED PARTIES
G.T. Capital is the Portfolio's investment manager and administrator. The
Portfolio pays investment management and administration fees to G.T. Capital at
the annualized rate of 0.725% on the first $500 million of average daily net
assets of the Portfolio; 0.70% on the next $500 million; 0.675% on the next $500
million; and 0.65% on amounts thereafter. These fees are computed daily and paid
monthly.
The Portfolio pays each of its Trustees who is not an employee, officer or
director of G.T. Capital, G.T. Global Financial Services, Inc. or G.T. Global
Investor Services Inc. $500 per year plus $150 for each meeting of the board or
any committee thereof attended by the Trustees.
At October 31, 1994, all of the shares of beneficial interest of the Portfolio
were owned either by G.T. Global Financial Services Fund or G.T. Capital.
3. PURCHASES AND SALES OF SECURITIES
For the period ended October 31, 1994, purchases and sales of investment
securities by the Portfolio, other than U.S. government obligations and
short-term investments, aggregated $6,216,543 and
$1,211,277, respectively. There were no purchases or sales of U.S. government
obligations by the Portfolio for the period ended October 31, 1994.
Statement of Additional Information Page 87
<PAGE>
G.T. GLOBAL INFRASTRUCTURE 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 Infrastructure Fund, one of the funds organized as a series of G.T.
Investment Funds, Inc., as of October 31, 1994 and the related statement of
operations, statement of changes in net assets and the financial highlights for
the period ended May 31, 1994 (commencement of operations) to October 31, 1994.
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 audit.
We conducted our audit 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. 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
audit provides 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 Infrastructure Fund as of October 31, 1994, and the results of its
operations, the changes in its net assets and the financial highlights for the
period from May 31, 1994 (commencement of operations) to October 31, 1994, in
conformity with generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
BOSTON, MASSACHUSETTS
DECEMBER 16, 1994
Statement of Additional Information Page 88
<PAGE>
G.T. GLOBAL INFRASTRUCTURE FUND
STATEMENT OF ASSETS
AND LIABILITIES
October 31, 1994
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Assets:
<S> <C>
Investments in Global Infrastructure Portfolio (cost $49,997,022) (Note 1)...........................
$ 51,106,690
Receivable for Fund shares sold......................................................................
3,453,478
Receivable for expense reimbursement (Note 2)........................................................
68,271
Unamortized deferred organizational expenses (Note 1)................................................
47,208
Prepaid expenses.....................................................................................
2,044
-------------
Total assets.........................................................................................
54,677,691
-------------
Liabilities:
Payable for service and distribution expenses (Note 2)...............................................
28,736
Payable for Fund shares repurchased..................................................................
23,648
Payable for registration fees........................................................................
15,064
Payable for printing and postage expenses............................................................
12,589
Payable for professional fees........................................................................
11,029
Payable for Administration fees (Note 2).............................................................
9,243
Payable for custodian fees...........................................................................
5,194
Payable for Directors' fees (Note 2).................................................................
1,281
Accrued expenses.....................................................................................
1,421
-------------
Total liabilities....................................................................................
108,205
-------------
Net assets.............................................................................................
$ 54,569,486
-------------
-------------
Class A:
Net asset value and redemption price per share
($23,615,168 DIVIDED BY 1,893,269 shares outstanding)................................................
$ 12.47
-------------
-------------
Maximum offering price per share
(100/95.25 of $12.47)*...............................................................................
$ 13.09
-------------
-------------
Class B:+
Net asset value and offering price per share
($30,954,318 DIVIDED BY 2,486,186 shares outstanding)................................................
$ 12.45
-------------
-------------
Net assets consist of:
Paid in capital (Note 3).............................................................................
$ 53,494,717
Undistributed net investment income..................................................................
13,178
Accumulated net realized loss on investments and foreign currency conversions -- Global
Infrastructure Portfolio............................................................................
(49,221)
Net unrealized appreciation of investments, dividends receivable, interest receivable, securities
purchased and sold and foreign currency conversions -- Global Infrastructure Portfolio..............
1,110,812
-------------
Total -- representing net assets applicable to capital shares outstanding............................
$ 54,569,486
-------------
-------------
<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 89
<PAGE>
G.T. GLOBAL INFRASTRUCTURE FUND
STATEMENT OF OPERATIONS
May 31, 1994 (commencement of operations) to October 31, 1994
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Investment income (Note 1):
Dividend income -- Global Infrastructure Portfolio..................................................... $ 121,069
Interest income -- Global Infrastructure Portfolio..................................................... 104,902
----------
Total investment income................................................................................ 225,971
----------
Expenses:
Expenses -- Global Infrastructure Portfolio............................................................ 101,457
Service and distribution expenses (Note 2)
Class A.................................................................................. $ 18,271
Class B.................................................................................. 40,937 59,208
----------
Transfer agent fees (Note 2)........................................................................... 33,831
Printing and postage expenses.......................................................................... 23,570
Professional fees...................................................................................... 19,772
Administration fees (Note 2)........................................................................... 19,370
Registration fees...................................................................................... 8,112
Custodian fees......................................................................................... 5,332
Directors' fees (Note 2)............................................................................... 4,590
Amortization of organizational expenses (Note 1)....................................................... 4,292
Other.................................................................................................. 1,530
----------
Total expenses before expense reimbursement............................................................ 281,064
Less expense reimbursement (Note 2).................................................................... (68,271)
----------
Total expenses......................................................................................... 212,793
----------
Net investment income.................................................................................... 13,178
----------
Net realized and unrealized loss on investments and foreign currencies (Note 1):
Net realized loss on investments -- Global Infrastructure Portfolio........................ (27,320)
Net realized loss on foreign currency conversions -- Global Infrastructure Portfolio....... (21,901)
----------
Net realized loss...................................................................................... (49,221)
Increase in unrealized appreciation of dividends receivable, interest receivable,
securities purchased and sold, and foreign currency conversions -- Global Infrastructure
Portfolio................................................................................. 1,144
Increase in unrealized appreciation of investments -- Global Infrastructure Portfolio...... 1,109,668
----------
Net unrealized appreciation............................................................................ 1,110,812
----------
Net realized and unrealized gain on investments and foreign currency conversions -- Global Infrastructure
Portfolio............................................................................................... 1,061,591
----------
Net increase in net assets resulting from operations..................................................... $1,074,769
----------
----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 90
<PAGE>
G.T. GLOBAL INFRASTRUCTURE FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MAY 31, 1994
(COMMENCEMENT OF OPERATIONS)
TO OCTOBER 31, 1994
-----------------------------
<S> <C>
Increase in net assets
Operations:
Net investment income..............................................................................
$ 13,178
Net realized loss on investments and foreign currency conversions -- Global Infrastructure
Portfolio.........................................................................................
(49,221)
Increase in unrealized appreciation of investments, dividends receivable, interest receivable,
securities purchased and sold and foreign currency conversions -- Global Infrastructure
Portfolio.........................................................................................
1,110,812
------------
Net increase in net asssets resulting from investment operations...................................
1,074,769
Capital Share Transactions (Note 3):
Increase from shares sold and reinvested...........................................................
55,939,368
Decrease from shares repurchased...................................................................
(2,544,651)
------------
Net increase from capital share transactions.......................................................
53,394,717
------------
Total increase in net assets.........................................................................
54,469,486
Net assets:
Beginning of period................................................................................
100,000
------------
End of period......................................................................................
$ 54,569,486*
------------
------------
<FN>
- ----------------
* Includes undistributed net investment income of $13,178.
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 91
<PAGE>
G.T. GLOBAL INFRASTRUCTURE FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout the period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
CLASS A CLASS B
---------------------------- ----------------------------
MAY 31, 1994 MAY 31, 1994
(COMMENCEMENT OF OPERATIONS) (COMMENCEMENT OF OPERATIONS)
TO OCTOBER 31, 1994 TO OCTOBER 31, 1994
---------------------------- ----------------------------
<S> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of the period............................. $ 11.43 $ 11.43
-------- --------
Income from investment operations:
Net investment income (loss)....................................... 0.01* (0.01)*
Net realized and unrealized gain on investments.................... 1.03 1.03
-------- --------
Net increase from investment operations............................ 1.04 1.02
-------- --------
Net asset value, end of period....................................... $ 12.47 $ 12.45
-------- --------
-------- --------
Total investment return (c).......................................... 9.10%(b) 8.92%(b)
Ratios and supplemental data:
Net assets, end of period (in 000's)................................. $23,615 $30,954
Ratio of net investment income (loss) to average net assets.......... 0.41%(a)* (0.09)%(a)*
Ratio of net expenses to average net assets.......................... 2.40%(a)* 2.90%(a)*
<FN>
- ----------------
(a) Annualized.
(b) Not annualized.
(c) Total investment return does not include sales charges.
* The annualized ratios of operating expenses and net investment income to
average net assets for Class A and Class B before reimbursement by G.T.
Capital Management, Inc. for the period ended October 31, 1994 would have
been 3.28% and (0.47)%; and 3.78% and (0.97)%, respectively. The net
investment income per share would have been reduced by $0.02 for each
class.
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 92
<PAGE>
G.T. GLOBAL INFRASTRUCTURE FUND
NOTES TO
FINANCIAL STATEMENTS
October 31, 1994
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
G.T. Global Infrastructure 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 Fund invests substantially all of its investable assets in
Global Infrastructure Portfolio ("Portfolio"), which is registered as an
open-end management investment company under the 1940 Act and has investment
objectives, policies and limitations substantially identical to those of the
Fund. The value of the Fund's investment in the Portfolio reflects the Fund's
proportionate interest in the net assets of the Portfolio. The financial
statements of the Portfolio, including the Portfolio of Investments, are
included elsewhere in this Report and should be read in conjunction with the
Fund's financial statements.
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) INVESTMENT VALUATION
Valuation of securities and other investment practices by the Portfolio are
discussed in Note 1 of the Portfolio's Notes to Financial Statements which are
included elsewhere in this Report.
(B) 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. The Fund currently has a capital loss carryforward of $26,214
which expires in 2002.
(C) DISTRIBUTION 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 Portfolio and timing differences.
(D) 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 $51,500. These expenses
are being amortized on a straightline basis over a five-year period.
2. RELATED PARTIES
G.T. Capital Management, Inc. ("G.T. Capital") is the Fund's administrator. The
Fund pays administration fees to G.T. Capital at the annualized rate of 0.25% of
the Fund's average daily net assets. 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 period ended October 31, 1994, G.T. Global retained
$51,215 of such sales charges. G.T. Global also makes ongoing shareholder
servicing and trail commission payments to dealers whose clients hold Class A
shares.
Statement of Additional Information Page 93
<PAGE>
G.T. GLOBAL INFRASTRUCTURE FUND
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 period ended October 31,
1994, G.T. Global collected CDSCs in the amount of $1,528. 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 plans of distribution 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 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.
Statement of Additional Information Page 94
<PAGE>
G.T. GLOBAL INFRASTRUCTURE FUND
3. 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
Emerging Markets 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
Strategic Income 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 Natural
Resources 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 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>
MAY 31, 1994
(COMMENCEMENT OF
OPERATIONS)
TO OCTOBER 31, 1994
----------------------
CLASS A SHARES AMOUNT
- ----------------------------------------------------------------------------------------------------------- --------- -----------
<S> <C> <C>
Shares sold................................................................................................ 2,020,133 $24,648,202
Shares repurchased......................................................................................... (131,239) (1,614,053)
--------- -----------
Net increase............................................................................................... 1,888,894 $23,034,149
--------- -----------
--------- -----------
<CAPTION>
MAY 31, 1994
(COMMENCEMENT OF
OPERATIONS)
TO OCTOBER 31, 1994
----------------------
CLASS B SHARES AMOUNT
- ----------------------------------------------------------------------------------------------------------- --------- -----------
<S> <C> <C>
Shares sold................................................................................................ 2,557,551 $31,291,166
Shares repurchased......................................................................................... (75,739) (930,598)
--------- -----------
Net increase............................................................................................... 2,481,812 $30,360,568
--------- -----------
--------- -----------
</TABLE>
Statement of Additional Information Page 95
<PAGE>
GLOBAL INFRASTRUCTURE PORTFOLIO
REPORT OF
INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
ANNUAL REPORT
To the Shareholders and Board of Trustees of
Global Infrastructure Portfolio:
We have audited the accompanying statement of assets and liabilities of Global
Infrastructure Portfolio, including the schedule of portfolio investments, as of
October 31, 1994 and the related statement of operations, statement of changes
in net assets and supplementary data for the period from May 31, 1994
(commencement of operations) to October 31, 1994. These financial statements and
the supplementary data are the responsibility of the Portfolio's management. Our
responsibility is to express an opinion on these financial statements and the
supplementary data based on our audit.
We conducted our audit 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 supplementary data 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 audit provides a reasonable basis for our opinion.
In our opinion, the financial statements and the supplemenatary data referred to
above present fairly, in all material respects, the financial position of Global
Infrastructure Portfolio as of October 31, 1994 and the results of its
operations, the changes in its net assets and the supplementary data for the
period from May 31, 1994 (commencement of operations) to October 31, 1994, in
conformity with generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
BOSTON, MASSACHUSETTS
DECEMBER 16, 1994
Statement of Additional Information Page 96
<PAGE>
GLOBAL INFRASTRUCTURE PORTFOLIO
PORTFOLIO OF INVESTMENTS
October 31, 1994
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market % of Net
Equity Investments Country Shares Value Assets(a)
<S> <C> <C> <C> <C>
- -----------------------------------------------------------------------------
Electrical & Gas Utilities (21.0%)
- ------------------------------------------------
Korea Electric Power
ADR (b) KOR 74,900 $1,460,550 2.8
Companhia Energetica de
Minas Gerais (Cemig)
ADR (b)(c)(d) BRZL 50,000 1,323,895 2.6
EVN (Energie Versorgung
Niedr) ASTRI 9,000 1,131,858 2.2
Capex S.A. (c) ARG 110,000 1,068,473 2.1
Empresa Nacional de
Electridad S.A.
(Endesa) ADR (b) SPN 23,100 1,059,713 2.1
Edison S.P.A. ITLY 245,000 1,048,350 2.1
Chilegener S.A. ADR (b) CHLE 35,000 988,750 1.9
Consolidated Electric
Power Asia HK 350,000 817,587 1.6
AES China Generating
Co. Ltd. Class A (c) US 54,100 608,625 1.2
Huaneng Power
International, Inc.
ADR (b)(c) CHNA 30,000 555,000 1.1
Bolivian Power (b) BOL 22,000 533,500 1.0
Hong Kong Electric HK 43,000 135,227 0.3
-------------
10,731,528
-------------
Telephone Networks (15.3%)
- ------------------------------------------------
Stet (Societa
Finanziara Telefonica)
Savings ITLY 532,000 1,316,378 2.6
Telecomunicacoes
Brasileiras S.A. -
Telebras Sponsored ADR
(b) BRZL 23,113 1,190,320 2.3
Telefonica de Espana
ADR (b) SPN 28,000 1,134,120 2.2
Telecom Corporation of
New Zealand Ltd. ADR
(b) NZ 20,000 1,112,500 2.2
PT Indonesia Satellite
(Indosat) ADR (b)(c) INDO 27,000 1,059,750 2.1
Telefonos de Mexico,
S.A. de C.V. "L" ADR
(b) MEX 16,000 882,000 1.7
<CAPTION>
Market % of Net
Equity Investments Country Shares Value Assets(a)
<S> <C> <C> <C> <C>
- -----------------------------------------------------------------------------
Pakistan Telecommu-
nications Company Ltd.
(c): PAK -- -- 1.4
Common -- 2,800 $445,912 --
Vouchers 144A (b)(d) -- 1,392 230,376 --
Telecom Argentina S.A.
"B" ARG 63,000 383,385 0.8
-------------
7,754,741
-------------
Cement (12.4%)
- ------------------------------------------------
Siam Cement Co. Ltd.
(Foreign) THAI 24,000 1,384,912 2.7
Cementos Paz del Rio.
S.A. 144A ADR (b)(d) COL 48,500 1,200,375 2.3
Giant Cement Holdings,
Inc. (c) US 75,000 1,050,000 2.1
La Cemento Nacional
144A GDR (b)(c)(d) ECDR 3,000 1,050,000 2.1
Lone Star Industries,
Inc. US 50,000 968,555 1.9
Corporacion Cementera
Argentina S.A.
(Corcemar) (c) ARG 43,247 359,272 0.7
PT Semen Cibinong
(Foreign) INDO 86,000 304,880 0.6
-------------
6,317,994
-------------
Telecom Equipment (11.4%)
- ------------------------------------------------
Nokia AB (Preferred)
ADR (b)(c) FIN 21,200 1,592,650 3.1
Motorola, Inc. US 20,000 1,177,500 2.3
Allgon AB-B Free SWDN 50,000 1,127,286 2.2
BroadBand Technologies,
Inc. (c) US 40,000 1,035,000 2.0
Champion Technology
Holdings HK 2,800,000 905,912 1.8
-------------
5,838,348
-------------
Machinery & Engineering (6.3%)
- ------------------------------------------------
Mannesmann AG GER 5,200 1,390,541 2.7
Caterpillar, Inc. US 20,000 1,195,180 2.3
United Engineers
(Malaysia) Ltd. MAL 125,000 675,279 1.3
-------------
3,261,000
-------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 97
<PAGE>
GLOBAL INFRASTRUCTURE PORTFOLIO
<TABLE>
<CAPTION>
Market % of Net
Equity Investments Country Shares Value Assets(a)
- -----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Transportation - Road & Rail (5.9%)
- ------------------------------------------------
ABC Rail Products
Corporation (c) US 60,000 $1,335,438 2.6
Conrail, Inc. US 22,000 1,198,088 2.3
East Japan Railway Co. JPN 95 473,823 0.9
Covenant Transport Inc.
Class A US 2,300 43,700 0.1
-------------
3,051,049
-------------
Electrical Plant/Equipment (3.8%)
- ------------------------------------------------
ASEA AB-B Free SWDN 16,700 1,213,210 2.4
E.R.G. Australia
Limited (c) AUSL 400,000 725,165 1.4
-------------
1,938,375
-------------
Construction (3.6%)
- ------------------------------------------------
Fluor Corporation US 22,000 1,089,168 2.1
Grupo Tribasa, S.A. de
C.V. Sponsored ADR
(b)(c) MEX 25,000 784,375 1.5
-------------
1,873,543
-------------
Telephone - Long Distance (3.5%)
- ------------------------------------------------
IDB Communications
Group, Inc. (c) US 191,000 1,766,750 3.5
Wireless Communications (2.7%)
- ------------------------------------------------
Centennial Cellular
Corporation Class A
(c) US 80,000 1,400,000 2.7
Conglomerate (2.2%)
- ------------------------------------------------
General Electric
Company US 23,000 1,124,994 2.2
<CAPTION>
Market % of Net
Equity Investments Country Shares Value Assets(a)
<S> <C> <C> <C> <C>
- -----------------------------------------------------------------------------
Metals - Steel (2.1%)
- ------------------------------------------------
Hylsamex S.A. de C.V.
144A ADR (b)(d) MEX 49,000 $1,078,000 2.1
Gas Production & Distribution (2.0%)
- ------------------------------------------------
Williams Companies,
Inc. US 36,000 1,044,000 2.0
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
Total Equity Investments
(cost $45,920,654)............................. 47,180,322 92.2
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
<CAPTION>
Fixed Income Principal
Investment Currency Amount
<S> <C> <C> <C> <C>
- ------------------------------------------------
Philippines Corporate Bond (1.7%)
- ------------------------------------------------
International Container
Terminal Services,
Conv. Bond, 5% due
9/15/01 144A (d) (cost
$1,000,000) USD 1,000,000 850,000 1.7
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
<CAPTION>
Short-Term Investment
- -----------------------
<S> <C> <C> <C> <C>
Repurchase Agreement (17.3%)
- ------------------------------------------------
Dated October 31, 1994 with State Street Bank &
Trust Company, due November 1, 1994, for an
effective yield of 4.7% collateralized by
$9,000,000 Federal Home Loan Mortgage
Corporation Note, 6% due 5/15/20. (Market value
$8,865,000, including accrued interest.) (cost
$8,820,151).................................... 8,820,151 17.3
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
Total Investments (cost $55,740,805)*........... 56,850,473 111.2
Liabilities Less Other Assets................... (5,743,683) (11.2 )
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
Net Assets...................................... $51,106,790 100.0
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
<FN>
- --------------------------------------------------------------------------------
(a) Percentages indicated are based on net assets of $51,106,790.
(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.
Abbreviations:
ADR -- American Depository Receipt
GDR -- Global Depository Receipt
* For Federal income tax purposes, cost is $55,740,805 and appreciation
(depreciation) of securities is as follows:
Unrealized appreciation: $2,286,910
Unrealized depreciation: (1,177,242)
----------
Net unrealized
appreciation: $1,109,668
----------
----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 98
<PAGE>
GLOBAL INFRASTRUCTURE PORTFOLIO
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 3.6 3.6
Austria 2.2 2.2
Australia 1.4 1.4
Bolivia 1.0 1.0
Brazil 4.9 4.9
Chile 1.9 1.9
China 1.1 1.1
Colombia 2.3 2.3
Ecuador 2.1 2.1
Finland 3.1 3.1
Germany 2.7 2.7
Hong Kong 3.7 3.7
Indonesia 2.7 2.7
Italy 4.7 4.7
Japan 0.9 0.9
Korea 2.8 2.8
Malaysia 1.3 1.3
Mexico 5.3 5.3
New Zealand 2.2 2.2
Pakistan 1.4 1.4
Philippines 1.7 1.7
Spain 4.3 4.3
Sweden 4.6 4.6
Thailand 2.7 2.7
U.S. 29.3 17.3 (11.2) 35.4
--
--- --- ----- ---------
Total 92.2 1.7 17.3 (11.2) 100.0
--
--
--- --- ----- ---------
--- --- ----- ---------
<FN>
- ----------------
(a) Percentages indicated are based on net assets of $51,106,790.
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 99
<PAGE>
GLOBAL INFRASTRUCTURE PORTFOLIO
STATEMENT OF ASSETS
AND LIABILITIES
October 31, 1994
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Assets:
Investments in securities, at value (cost $46,920,654) (Note 1)...................................... $ 48,030,322
Repurchase agreements (cost $8,820,151) (Note 1)..................................................... 8,820,151
Foreign currency (cost $133,633)..........................................................
$ 132,697
U.S. currency.............................................................................
177 132,874
---------
Receivable for securities sold....................................................................... 2,554,855
Dividends receivable................................................................................. 92,438
Unamortized deferred organizational expenses (Note 1)................................................ 22,917
Interest receivable.................................................................................. 6,389
Prepaid expenses..................................................................................... 234
Cash held as collateral for securities loaned (Note 1)............................................... 3,542,400
-------------
Total assets......................................................................................... 63,202,580
-------------
Liabilities:
Payable for securities purchased..................................................................... 8,476,673
Payable for investment management and administration fees (Note 2)................................... 32,978
Payable for deferred organizational expenses......................................................... 25,000
Payable for professional fees........................................................................ 12,040
Payable for Trustees' fees (Note 2).................................................................. 1,368
Accrued expenses..................................................................................... 5,331
Collateral for securities loaned (Note 1)............................................................ 3,542,400
-------------
Total liabilities.................................................................................... 12,095,790
-------------
Net assets............................................................................................. $ 51,106,790
-------------
-------------
Net assets consist of:
Paid in capital...................................................................................... $ 49,920,685
Undistributed net investment income.................................................................. 124,514
Accumulated net realized loss on investments and foreign currency conversions........................ (49,221)
Net unrealized appreciation of investments, dividends receivable, interest receivable, securities
purchased and sold and foreign currency conversions................................................. 1,110,812
-------------
Total -- representing net assets applicable to shares of beneficial interest outstanding............. $ 51,106,790
-------------
-------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 100
<PAGE>
GLOBAL INFRASTRUCTURE PORTFOLIO
STATEMENT OF OPERATIONS
May 31, 1994 (commencement of operations) to October 31, 1994
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Investment income (Note 1):
Dividend (net of withholding tax of $5,467)............................................................ $ 121,069
Interest............................................................................................... 104,902
----------
Total investment income................................................................................ 225,971
----------
Expenses:
Investment management and administration fees (Note 2)................................................. 51,922
Professional fees...................................................................................... 18,770
Custodian fees (Note 1)................................................................................ 14,594
Printing and postage expenses.......................................................................... 9,650
Amortization of organizational expenses (Note 1)....................................................... 2,083
Trustees' fees (Note 2)................................................................................ 2,908
Other.................................................................................................. 1,530
----------
Total expenses......................................................................................... 101,457
----------
Net investment income.................................................................................... 124,514
----------
Net realized and unrealized loss on investments and foreign currencies (Note 1):
Net realized loss on investments........................................................... $ (27,320)
Net realized loss on foreign currency conversions.......................................... (21,901)
----------
Net realized loss...................................................................................... (49,221)
Increase in unrealized appreciation of dividends receivable, interest receivable,
securities purchased and sold, and foreign currency conversions........................... 1,144
Increase in unrealized appreciation of investments......................................... 1,109,668
----------
Net unrealized appreciation............................................................................ 1,110,812
----------
Net realized and unrealized gain on investments and foreign currency conversions......................... 1,061,591
----------
Net increase in net assets resulting from operations..................................................... $1,186,105
----------
----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 101
<PAGE>
GLOBAL INFRASTRUCTURE PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MAY 31, 1994
(COMMENCEMENT OF OPERATIONS)
TO OCTOBER 31, 1994
-----------------------------
<S> <C>
Increase in net assets
Operations:
Net investment income..............................................................................
$ 124,514
Net realized loss on investments and foreign currency conversions..................................
(49,221)
Increase in unrealized appreciation of investments, dividends receivable, interest receivable,
securities purchased and sold and foreign currency conversions....................................
1,110,812
------------
Net increase in net asssets resulting from operations..............................................
1,186,105
Beneficial interest transactions:
Contributions......................................................................................
52,494,964
Withdrawals........................................................................................
(2,674,379)
------------
Net increase from beneficial interest transactions.................................................
49,820,585
------------
Total increase in net assets.........................................................................
51,006,690
Net assets:
Beginning of period................................................................................
100,100
------------
End of period......................................................................................
$ 51,106,790*
------------
------------
<FN>
- ----------------
* Includes undistributed net investment income of $124,514.
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 102
<PAGE>
GLOBAL INFRASTRUCTURE PORTFOLIO
SUPPLEMENTARY DATA
- --------------------------------------------------------------------------------
Contained below are ratios and supplemental data that have been derived from
information provided in the financial statements.
<TABLE>
<CAPTION>
MAY 31, 1994
(COMMENCEMENT OF OPERATIONS)
TO OCTOBER 31, 1994
-----------------------------
<S> <C>
Ratios and supplemental data:
Net assets, end of period (in 000's)................................................................. $ 51,107
Ratio of net investment income to average net assets................................................. 1.44%(a)
Ratio of expenses to average net assets.............................................................. 1.17%(a)
Portfolio turnover rate.............................................................................. 18%
<FN>
- ----------------
(a) Annualized.
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 103
<PAGE>
GLOBAL INFRASTRUCTURE PORTFOLIO
NOTES TO
FINANCIAL STATEMENTS
October 31, 1994
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
Global Infrastructure Portfolio ("Portfolio") is organized as a New York Trust
and is registered under the Investment Company Act of 1940, as amended ("1940
Act"), as a non-diversified, open-end management investment company. The
following is a summary of significant accounting policies consistently followed
by the Portfolio in the preparation of the financial statements. The policies
are in conformity with generally accepted accounting principles.
(A) PORTFOLIO VALUATION
The Portfolio calculates the net asset value of and completes orders to
purchase, exchange or repurchase Portfolio shares of beneficial interest 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 fluctuations, 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
Portfolio's Board of Trustees.
Portfolio securities which are primarily traded on foreign exchanges are
generally valued at the preceding closing values of such securities on their
respective exchanges, and those values are then translated into U.S. dollars at
the current exchange 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 Portfolio's Board of Trustees.
(B) FOREIGN CURRENCY TRANSLATION
The accounting records of the Portfolio 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 Portfolio 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 Portfolio 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 Portfolio'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.
In addition, the Portfolio may focus its investments in certain related
infrastructure industries, subjecting the Portfolio to greater risk than a fund
that is more diversified.
Statement of Additional Information Page 104
<PAGE>
GLOBAL INFRASTRUCTURE PORTFOLIO
(C) REPURCHASE AGREEMENTS
With respect to repurchase agreements entered into by the Portfolio, it is the
Portfolio's policy to always receive, as collateral, United States government
securities or other high quality debt securities of which the value, including
accrued interest, is at least equal to the amount to be paid to the Portfolio
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 Portfolio as an unrealized gain or loss. When the Forward is closed, the
Portfolio 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
Portfolio 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
Portfolio 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 Portfolio writes a call or put option, an amount equal to the premium
received is included in the Portfolio's "Statement of Assets and Liabilities" as
an asset and an equivalent liability. The amount of the liability is
subsequently marked-to-market to reflect the current market value of the option.
The current market value of an option listed on a traded exchange is valued at
its last 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 Portfolio enters into a closing purchase
transaction, a gain or loss is realized without regard to any unrealized gain or
loss on the underlying security, and the liability related to such option is
extinguished. If a written call option is exercised, a gain or loss is realized
from the sale of the underlying security and the proceeds of the sale are
increased by the premium originally received. If a written put option is
exercised, the cost of the underlying security purchased would be decreased by
the premium originally received. The Portfolio can write options only on a
covered basis, which for calls requires that the Portfolio hold the underlying
security and which for puts requires the Portfolio to set aside cash, U.S.
government securities or other liquid, high-grade debt securities in an amount
not less than the exercise price or otherwise provide adequate cover at all
times while the put option is outstanding. At October 31, 1994, the Portfolio
had no written options.
The premium paid by the Portfolio for the purchase of a call or put option is
included in the Portfolio's "Statement of Assets and Liabilities" as an
investment and subsequently "marked-to-market" to reflect the current market
value of the option. If an option which the Portfolio has purchased expires on
the stipulated expiration date, the Portfolio realizes a loss in the amount of
the cost of the option. If the Portfolio enters into a closing sale transaction,
the Portfolio realizes a gain or loss, depending on whether proceeds from the
closing sale transaction are greater or less than the cost of the option. If the
Portfolio exercises a call option, the cost of the securities acquired by
exercising the call is increased by the premium paid to buy the call. If the
Portfolio exercises a put option, it realizes a gain or loss from the sale of
the underlying security, and the proceeds from such sale are decreased by the
premium originally paid. At October 31, 1994, the Portfolio had no outstanding
purchased options.
The risk associated with purchasing options is limited to the premium originally
paid. The risk in writing a call option is that the Portfolio may forego the
opportunity of profit if the market value of the underlying security or index
increases and the option is exercised. The risk in writing a put option is that
the Portfolio may incur a loss if the market value of the underlying security or
index decreases and the option is exercised. In addition, there is the risk the
Portfolio 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
Portfolio is required to pledge to the broker an amount of cash or securities
equal to the minimum "initial margin" requirements of the exchange on which the
contract is traded. Pursuant to the contract, the Portfolio agrees to receive
from or pay to the broker an amount of cash equal to the daily fluctuation in
value of the contract. Such receipts or payments are known as "variation margin"
and are recorded by the Portfolio as unrealized gains or losses. When the
contract is closed, the Portfolio records a realized gain or loss equal to the
difference between the value of the contract at the time it was opened and the
value at the time it was closed. The potential risk to the Portfolio is that the
change in value of the underlying securities may not correlate to the change in
value of the contracts. At October 31, 1994, the Portfolio did not hold futures
contracts.
Statement of Additional Information Page 105
<PAGE>
GLOBAL INFRASTRUCTURE PORTFOLIO
(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. 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 Portfolio may trade securities on other than normal
settlement terms. This may increase the risk if the other party to the
transaction fails to deliver and causes the Portfolio to subsequently invest at
less advantageous prices.
(H) PORTFOLIO SECURITIES LOANED
At October 31, 1994, stocks with an aggregate value of approximately $3,410,637
were on loan to brokers. The loans were secured by cash collateral of
$3,542,400. For international securities, cash collateral is received by the
Portfolio 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 Portfolio 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 the loan. For
the period ended October 31, 1994, the Portfolio received fees of $584 of income
from securities lending.
(I) TAXES
It is the policy of the Portfolio to meet the requirements of the Internal
Revenue Code of 1986, as amended ("Code"). Therefore, no provision has been made
for Federal taxes on income, capital gains, or unrealized appreciation of
securities held.
(J) DEFERRED ORGANIZATIONAL EXPENSES
Expenses incurred by the Portfolio 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 $25,000. These expenses
are being amortized on a straightline basis over a five-year period.
(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 Portfolio'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.
(L) INDEXED SECURITIES
The Portfolio may invest in indexed securities whose value is linked either
directly or indirectly to changes in foreign currencies, interest rates,
equities, indices, or other reference instruments. Indexed securities may be
more volatile than the reference instrument itself, but any loss is limited to
the amount of the original investment.
2. RELATED PARTIES
G.T. Capital is the Portfolio's investment manager and administrator. The
Portfolio pays investment management and administration fees to G.T. Capital at
the annualized rate of 0.725% on the first $500 million of average daily net
assets of the Portfolio; 0.70% on the next $500 million; 0.675% on the next $500
million; and 0.65% on amounts thereafter. These fees are computed daily and paid
monthly.
The Portfolio pays each of its Trustees who is not an employee, officer or
director of G.T. Capital, G.T. Global Financial Services, Inc. or G.T. Global
Investor Services, Inc. $500 per year plus $150 for each meeting of the board or
any committee thereof attended by the Trustees.
At October 31, 1994, all of the shares of beneficial interest of the Portfolio
were owned either by G.T. Global Infrastructure Fund or G.T. Capital.
3. PURCHASES AND SALES OF SECURITIES
For the period ended October 31, 1994, purchases and sales of investment
securities by the Portfolio, other than U.S. government obligations and
short-term investments, aggregated $50,619,297 and $3,671,323, respectively.
There were no purchases or sales of U.S. government obligations by the Portfolio
for the period ended October 31, 1994.
Statement of Additional Information Page 106
<PAGE>
G.T. GLOBAL NATURAL RESOURCES 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 Natural Resources Fund, one of the funds organized as a series of G.T.
Investment Funds, Inc., as of October 31, 1994 and the related statement of
operations, the statement of changes in net assets and the financial highlights
for the period from May 31, 1994 (commencement of operations) to October 31,
1994. 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
audit.
We conducted our audit 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. 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
audit provides 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 Natural Resources Fund as of October 31, 1994 and the results of its
operations, the changes in its net assets and the financial highlights for the
period from May 31, 1994 (commencement of operations) to October 31, 1994, in
conformity with generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
BOSTON, MASSACHUSETTS
DECEMBER 16, 1994
Statement of Additional Information Page 107
<PAGE>
G.T. GLOBAL NATURAL RESOURCES FUND
STATEMENT OF ASSETS
AND LIABILITIES
October 31, 1994
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Assets:
Investments in Global Natural Resources Portfolio (cost $26,271,048) (Note 1).........................
$26,949,639
Receivable for Fund shares sold.......................................................................
1,297,467
Receivable for expense reimbursement (Note 2).........................................................
88,584
Unamortized deferred organizational expenses (Note 1).................................................
47,154
-----------
Total assets..........................................................................................
28,382,844
-----------
Liabilities:
Payable for Fund shares repurchased...................................................................
117,510
Payable for registration fees.........................................................................
15,149
Payable for service and distribution expenses (Note 2)................................................
14,658
Payable for printing and postage expenses.............................................................
12,279
Payable for professional fees.........................................................................
11,870
Payable for Administration fees (Note 2)..............................................................
4,966
Payable for custodian fees............................................................................
3,562
Payable for Directors' fees (Note 2)..................................................................
1,014
Accrued expenses......................................................................................
1,427
-----------
Total liabilities.....................................................................................
182,435
-----------
Net assets..............................................................................................
$28,200,409
-----------
-----------
Class A:
Net asset value and redemption price per share
($14,796,806 DIVIDED BY 1,192,523 shares outstanding)..................................................
$ 12.41
-----------
-----------
Maximum offering price per share
(100/95.25 of $12.41)*.................................................................................
$ 13.03
-----------
-----------
Class B:+
Net asset value and offering price per share
($13,403,603 DIVIDED BY 1,082,698 shares outstanding)..................................................
$ 12.38
-----------
-----------
Net assets consist of:
Paid in capital (Note 3)..............................................................................
$27,550,552
Undistributed net investment income...................................................................
106,264
Accumulated net realized loss on investments and foreign currency conversions -- Global Natural
Resources Portfolio..................................................................................
(130,259)
Net unrealized appreciation of investments, dividends receivable, securities purchased and sold and
foreign currency conversions -- Global Natural Resources Portfolio...................................
673,852
-----------
Total -- representing net assets applicable to capital shares outstanding.............................
$28,200,409
-----------
-----------
<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 108
<PAGE>
G.T. GLOBAL NATURAL RESOURCES FUND
STATEMENT OF OPERATIONS
May 31, 1994 (commencement of operations) to October 31, 1994
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Investment income (Note 1):
Dividend income -- Global Natural Resources Portfolio................................................ $ 181,185
Interest income -- Global Natural Resources Portfolio................................................ 41,311
------------
Total investment income.............................................................................. 222,496
------------
Expenses:
Expenses -- Global Natural Resources Portfolio....................................................... 85,185
Service and distribution expenses (Note 2)
Class A.............................................................................. $ 11,282
Class B.............................................................................. 19,180 30,462
------------
Transfer agent fees (Note 2)......................................................................... 23,200
Printing and postage expenses........................................................................ 19,432
Professional fees.................................................................................... 14,052
Administration fees (Note 2)......................................................................... 10,436
Registration fees.................................................................................... 7,442
Directors' fees (Note 2)............................................................................. 5,090
Amortization of organizational expenses (Note 1)..................................................... 4,346
Custodian fees....................................................................................... 3,641
Other................................................................................................ 1,530
------------
Total expenses before expense reimbursement.......................................................... 204,816
Less expense reimbursement (Note 2).................................................................. (88,584)
------------
Total expenses....................................................................................... 116,232
------------
Net investment income.................................................................................. 106,264
------------
Net realized and unrealized gain (loss) on investments and foreign currencies (Note 1):
Net realized loss on investments -- Global Natural Resources Portfolio................. (180,800)
Net realized gain on foreign currency conversions -- Global Natural Resources
Portfolio............................................................................. 50,541
------------
Net realized loss.................................................................................... (130,259)
Increase in unrealized depreciation of dividends receivable, securities purchased and
sold, and foreign currency conversions -- Global Natural Resources Portfolio.......... (4,739)
Increase in unrealized appreciation of investments -- Global Natural Resources
Portfolio............................................................................. 678,591
------------
Net unrealized appreciation.......................................................................... 673,852
------------
Net realized and unrealized gain on investments and foreign currency conversions -- Global Natural
Resources Portfolio................................................................................... 543,593
------------
Net increase in net assets resulting from operations................................................... $ 649,857
------------
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 109
<PAGE>
G.T. GLOBAL NATURAL RESOURCES FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MAY 31, 1994
(COMMENCEMENT OF OPERATIONS)
TO OCTOBER 31, 1994
-----------------------------
<S> <C>
Increase in net assets
Operations:
Net investment income..............................................................................
$ 106,264
Net realized loss on investments and foreign currency conversions..................................
(130,259)
Increase in unrealized appreciation of investments, dividends receivable, securities purchased and
sold and foreign currency conversions.............................................................
673,852
------------
Net increase in net asssets resulting from operations..............................................
649,857
Capital Share Transactions (Note 3):
Increase from shares sold and reinvested...........................................................
34,666,146
Decrease from shares repurchased...................................................................
(7,215,594)
------------
Net increase from capital share transactions.......................................................
27,450,552
------------
Total increase in net assets.........................................................................
28,100,409
Net assets:
Beginning of period................................................................................
100,000
------------
End of period......................................................................................
$ 28,200,409*
------------
------------
<FN>
- ----------------
* Includes undistributed net investment income of $106,264.
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 110
<PAGE>
G.T. GLOBAL NATURAL RESOURCES FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout the period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
CLASS A CLASS B
MAY 31, 1994 MAY 31, 1994
(COMMENCEMENT OF OPERATIONS) (COMMENCEMENT OF OPERATIONS)
TO OCTOBER 31, 1994 TO OCTOBER 31, 1994
----------------------------- -----------------------------
<S> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period................................. $ 11.43 $ 11.43
-------- --------
Income from investment operations:
Net investment income.............................................. 0.06* 0.03*
Net realized and unrealized gain on investments.................... 0.92 0.92
-------- --------
Net increase from investment operations............................ 0.98 0.95
-------- --------
Net asset value, end of period....................................... $ 12.41 $ 12.38
-------- --------
-------- --------
Total investment return(c)........................................... 8.57%(b) 8.31%(b)
Ratios and supplemental data:
Net assets, end of period (in 000's)................................. $ 14,797 $ 13,404
Ratio of net investment income to average net assets................. 2.63%(a)* 2.13%(a)*
Ratio of net expenses to average net assets.......................... 2.40%(a)* 2.90%(a)*
<FN>
- ----------------
(a) Annualized.
(b) Not Annualized.
(c) Total investment return does not include sales charges.
* The annualized ratios of operating expenses and net investment income to
average net assets for Class A and Class B before expense reimbursement by
G.T. Capital Management, Inc. for the period ended October 31, 1994 would
have been 4.38% and 0.65%; and 4.88% and 0.15%, respectively. The net
investment income per share would have been reduced by $0.04 for each
class.
</TABLE>
Statement of Additional Information Page 111
<PAGE>
G.T. GLOBAL NATURAL RESOURCES FUND
NOTES TO
FINANCIAL STATEMENTS
October 31, 1994
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
G.T. Global Natural Resources 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 Fund invests substantially all of
its investable assets in Global Natural Resources Portfolio ("Portfolio"), which
is registered as an open-end management investment company under the 1940 Act
and has investment objectives, policies and limitations substantially identical
to those of the Fund. The value of the Fund's investment in the Portfolio
reflects the Fund's proportionate interest in the net assets of the Portfolio.
The financial statements of the Portfolio, including the Portfolio of
Investments, are included elsewhere in this Report and should be read in
conjunction with the Fund's financial statements.
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) INVESTMENT VALUATION
Valuation of securities and other investment practices by the Portfolio are
discussed in Note 1 of the Portfolio's Notes to Financial Statements which are
included elsewhere in this Report.
(B) 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. The Fund currently has a capital loss carryforward of
$103,533 which expires in 2002.
(C) DISTRIBUTION 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 Portfolio and timing differences.
(D) 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 $51,500. These expenses
are being amortized on a straightline basis over a five-year period.
2. RELATED PARTIES
G.T. Capital Management, Inc. ("G.T. Capital") is the Fund's administrator. The
Fund pays administration fees to G.T. Capital at the annualized rate of 0.25% of
the Fund's average daily net assets. 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 items) 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 period ended October 31, 1994, G.T. Global retained
$14,471 of such sales charges. G.T. Global also makes ongoing shareholder
servicing and trail commission payments to dealers whose clients hold Class A
shares.
Statement of Additional Information Page 112
<PAGE>
G.T. GLOBAL NATURAL RESOURCES FUND
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 period ended October 31,
1994, G.T. Global collected CDSCs in the amount of $779. 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 plans of distribution 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 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.
Statement of Additional Information Page 113
<PAGE>
G.T. GLOBAL NATURAL RESOURCES FUND
3. 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
Emerging Markets 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
Strategic Income 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
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>
MAY 31, 1994
(COMMENCEMENT OF
OPERATIONS)
TO OCTOBER 31, 1994
----------------------
CLASS A SHARES AMOUNT
- --------------------------------------------------------------------------------------------------- --------- -----------
<S> <C> <C>
Shares sold........................................................................................ 1,647,315 $20,040,497
Shares repurchased................................................................................. (459,166) (5,648,929)
--------- -----------
Net increase....................................................................................... 1,188,149 $14,391,568
--------- -----------
--------- -----------
<CAPTION>
MAY 31, 1994
(COMMENCEMENT OF
OPERATIONS)
TO OCTOBER 31, 1994
----------------------
CLASS B SHARES AMOUNT
- --------------------------------------------------------------------------------------------------- --------- -----------
<S> <C> <C>
Shares sold........................................................................................ 1,205,189 $14,625,649
Shares repurchased................................................................................. (126,865) (1,566,665)
--------- -----------
Net increase....................................................................................... 1,078,324 $13,058,984
--------- -----------
--------- -----------
</TABLE>
Statement of Additional Information Page 114
<PAGE>
GLOBAL NATURAL RESOURCES PORTFOLIO
REPORT OF
INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
ANNUAL REPORT
To the Shareholders and Board of Trustees of
Global Natural Resources Portfolio:
We have audited the accompanying statement of assets and liabilities of Global
Natural Resources Portfolio, including the schedule of portfolio investments, as
of October 31, 1994 and the related statement of operations, statement of
changes in net assets and supplementary data for the period from May 31, 1994
(commencement of operations) to October 31, 1994. These financial statements and
the supplementary data are the responsibility of the Portfolio's management. Our
responsibility is to express an opinion on these financial statements and the
supplementary data based on our audit.
We conducted our audit 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 supplementary data 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 audit provides a reasonable basis for our opinion.
In our opinion, the financial statements and the supplementary data referred to
above present fairly, in all material respects, the financial position of Global
Natural Resources Portfolio as of October 31, 1994 and the results of its
operations, the changes in its net assets and the supplementary data for the
period from May 31, 1994 (commencement of operations) to October 31, 1994, in
conformity with generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
BOSTON, MASSACHUSETTS
DECEMBER 16, 1994
Statement of Additional Information Page 115
<PAGE>
GLOBAL NATURAL RESOURCES PORTFOLIO
PORTFOLIO OF INVESTMENTS
October 31, 1994
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market % of Net
Equity Investments Country Shares Value Assets(a)
<S> <C> <C> <C> <C>
- --------------------------------------------------------------------------
Metals - Non-Ferrous (22.4%)
- ----------------------------------------------
Eramet (c) FR 9,650 $704,954 2.6
Falconbridge Ltd. CAN 40,500 700,213 2.6
General Mining Union
Corporation (Gencor) S AFR 181,000 670,287 2.5
Pasminco Limited AUSL 376,100 631,537 2.3
Western Mining
Corporation Holdings
Limited AUSL 99,250 618,699 2.3
Rustenburg Platinum
Holdings Limited S AFR 18,700 540,948 2.0
Outokumpu OY "A" FIN 23,600 499,132 1.9
Savage Resources Ltd.
(c) AUSL 394,700 407,633 1.5
Hindalco Industries
Ltd. 144A GDR (b)(d) IND 11,000 385,000 1.4
Phelps Dodge
Corporation US 5,000 306,875 1.1
Bindura Nickel ZBBW 150,000 207,957 0.8
Compass Resources
N.L. (c) AUSL 175,000 162,531 0.6
Consolidated
Metallurgical Ind.
(c) S AFR 34,700 151,434 0.6
Impala Platinum
Holdings Ltd. ADR
(b) S AFR 3,000 66,375 0.2
-------------
6,053,575
-------------
Chemicals (15.5%)
- ----------------------------------------------
NOVA Corporation CAN 86,000 850,777 3.1
Dow Chemical Company US 10,000 735,000 2.6
Mississippi Chemical
Corporation (c) US 34,700 615,925 2.3
Methanex Corporation
(c) US 35,800 537,000 2.0
IMC Fertilizer Group,
Inc. US 10,500 446,250 1.7
Cominco Fertilizers
Ltd. CAN 20,000 445,636 1.7
Terra Industries,
Inc. US 30,000 318,750 1.2
PT Tri Polyta
Indonesia ADR (b)(c) INDO 8,000 238,000 0.9
-------------
4,187,338
-------------
<CAPTION>
Market % of Net
Equity Investments Country Shares Value Assets(a)
<S> <C> <C> <C> <C>
- --------------------------------------------------------------------------
Gold (14.1%)
- ----------------------------------------------
Golden Shamrock Mines
Ltd. (c) AUSL 525,000 $596,813 2.2
Acacia Resources Ltd.
(c) AUSL 400,000 594,398 2.2
Ashanti Goldfields
144A GDR (b)(c)(d) S AFR 27,000 577,800 2.1
Kloof Gold Mining S AFR 32,200 558,080 2.1
Perilya Mines N.L.
(c) AUSL 485,500 418,441 1.6
Randgold and
Exploration Company
Ltd. S AFR 95,000 296,135 1.1
Golden Star Resources
Ltd. (c) US 20,000 232,500 0.9
Free State Consoli-
dated Gold Mines S AFR 13,500 228,928 0.8
Randfontein Estates
Gold Mining S AFR 19,000 203,741 0.8
Southwestern Gold
Corporation (c) CAN 4,300 47,707 0.2
Mineral Resources
Inc. NZ 20,000 29,720 0.1
-------------
3,784,263
-------------
Forest Products (11.3%)
- ----------------------------------------------
St Laurent Paperboard
Inc. (c) CAN 100,700 1,284,815 4.8
Carter Holt Harvey
Limited NZ 261,000 633,448 2.4
Sappi Limited S AFR 32,000 534,663 2.0
Abitibi-Price, Inc.
(Installment
Receipt) (c) CAN 50,600 322,800 1.2
Aracruz Celulose S.A.
ADR (b)(c) BRZL 20,000 255,000 0.9
-------------
3,030,726
-------------
Metals - Steel (7.5%)
- ----------------------------------------------
Hylsamex S.A. de C.V.
144A ADR (b)(d) MEX 48,100 1,058,200 3.9
Caemi Mineracao E
Metal (Preferred)
(c) BRZL 2,700,000 428,671 1.6
Cospia S.A.
(Preferred "B") (c) BRZL 97,000 295,367 1.1
Schnitzer Steel
Industries, Inc.
Class A US 11,000 250,250 0.9
-------------
2,032,488
-------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 116
<PAGE>
GLOBAL NATURAL RESOURCES PORTFOLIO
<TABLE>
<CAPTION>
Market % of Net
Equity Investments Country Shares Value Assets(a)
- --------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Oil (6.0%)
- ----------------------------------------------
Atlantic Richfield,
Conv. Preferred,
9.01% till 9/15/97 US 14,200 $385,175 1.4
Elf Aquitaine ADR (b) FR 10,000 366,250 1.4
Cultus Petroleum N.L.
(c) AUSL 486,000 317,765 1.2
Norcen Energy
Resources, Inc. CAN 21,200 274,408 1.0
Penn West Petroleum
(c) CAN 45,000 262,112 1.0
-------------
1,605,710
-------------
Coal (4.5%)
- ----------------------------------------------
Randcoal Limited S AFR 98,000 684,289 2.5
Addington Resources,
Inc. (c) US 50,000 537,500 2.0
-------------
1,221,789
-------------
Misc. Materials & Commodities (4.4%)
- -------------------------------------------------------------
Auridiam Consolidated
N.L. AUSL 540,000 449,364 1.7
Reliance Industries
Ltd. 144A GDR (b)(d) IND 16,000 408,000 1.5
Granges, Inc. (c) CAN 78,000 165,577 0.6
<CAPTION>
Market % of Net
Equity Investments Country Shares Value Assets(a)
<S> <C> <C> <C> <C>
- --------------------------------------------------------------------------
Benguela Conces-
sions Limited (c) S AFR 130,000 $149,127 0.6
-------------
1,172,068
-------------
Energy Equipment & Services (1.7%)
- -------------------------------------------------------------
Mullen Trucking Ltd.
(c) CAN 42,400 270,488 1.0
Landmark Graphics
Corporation (c) US 9,500 194,750 0.7
-------------
465,238
- --------------------------------------------------------------------------
- --------------------------------------------------------------------------
Total Equity Investments
(cost $22,874,604)........................... 23,553,195 87.4
- --------------------------------------------------------------------------
- --------------------------------------------------------------------------
Short-Term Investment
- ----------------------------------
Repurchase Agreement (14.5%)
- ----------------------------------------------
Dated October 31, 1994 with State Street Bank
& Trust Company, due November 1, 1994, for an
effective yield of 4.7% collateralized by
$4,000,000 Federal National Mortgage
Association Note, 5.684% due 7/1/27. (Market
value $3,938,947, including accrued
interest.) (cost $3,919,512)................. 3,919,512 14.5
- --------------------------------------------------------------------------
- --------------------------------------------------------------------------
Total Investments (cost $26,794,116).......... 27,472,707 101.9
Liabilities Less Other Assets................. (522,968) (1.9 )
- --------------------------------------------------------------------------
- --------------------------------------------------------------------------
Net Assets.................................... $26,949,739 100.0
- --------------------------------------------------------------------------
- --------------------------------------------------------------------------
<FN>
- --------------------------------------------------------------------------------
(a) Percentages indicated are based on net assets of $26,949,739.
(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.
Abbreviations:
ADR -- American Depository Receipt
GDR -- Global Depository Receipt
* For Federal income tax purposes, cost is $26,811,795 and appreciation
(depreciation) of securities is as follows:
Unrealized appreciation: $1,321,912
Unrealized depreciation: (661,000)
----------
Net unrealized
appreciation: $ 660,912
----------
----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 117
<PAGE>
GLOBAL NATURAL RESOURCES PORTFOLIO
The Fund's Portfolio of Investments at October 31, 1994, was concentrated in the
following countries:
<TABLE>
<CAPTION>
Percentage of Net Assets (a)
--------------------------------------------------
Equity Short-Term Other Total
----------- ------------- ----------- ---------
<S> <C> <C> <C> <C>
Australia....................... 15.6 15.6
Brazil.......................... 3.6 3.6
Canada.......................... 17.2 17.2
Finland......................... 1.9 1.9
France.......................... 4.0 4.0
India........................... 2.9 2.9
Indonesia....................... 0.9 0.9
Mexico.......................... 3.9 3.9
New Zealand..................... 2.5 2.5
South Africa.................... 17.3 17.3
U.S............................. 16.8 14.5 (1.9) 29.4
Zimbabwe........................ 0.8 0.8
--- --- --- ---------
Total........................... 87.4 14.5 (1.9) 100.0
--- --- --- ---------
--- --- --- ---------
<FN>
- ----------------
(a) Percentages indicated are based on net assets of $26,949,739.
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 118
<PAGE>
GLOBAL NATURAL RESOURCES PORTFOLIO
STATEMENT OF ASSETS
AND LIABILITIES
October 31, 1994
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Assets:
Investments in securities, at value (cost $22,874,604) (Note 1)....................................... $23,553,195
Repurchase agreements (cost $3,919,512) (Note 1)...................................................... 3,919,512
U.S. currency..............................................................................
$ 805
Foreign currency (cost $843,363)...........................................................
833,715 834,520
---------
Receivable for securities sold........................................................................ 3,000,631
Dividends receivable.................................................................................. 167,967
Unamortized deferred organizational expenses (Note 1)................................................. 22,890
Cash held as collateral for securities loaned (Note 1)................................................ 316,200
-----------
Total assets.......................................................................................... 31,814,915
-----------
Liabilities:
Payable for securities purchased...................................................................... 4,480,749
Payable for deferred organizational expenses.......................................................... 25,000
Payable for investment management and administration fees (Note 2).................................... 18,057
Payable for professional fees......................................................................... 12,028
Payable for printing and postage expenses............................................................. 6,505
Payable for Trustees' fees (Note 2)................................................................... 2,141
Payable for custodian fees............................................................................ 1,824
Accrued expenses...................................................................................... 2,672
Collateral for securities loaned (Note 1)............................................................. 316,200
-----------
Total liabilities..................................................................................... 4,865,176
-----------
Net assets.............................................................................................. $26,949,739
-----------
-----------
Net assets consist of:
Paid in capital....................................................................................... $26,268,835
Undistributed net investment income................................................................... 137,311
Accumulated net realized loss on investments and foreign currency conversions......................... (130,259)
Net unrealized appreciation of investments, dividends receivable, securities purchased and sold and
foreign currency conversions......................................................................... 673,852
-----------
Total -- representing net assets applicable to shares of beneficial interest outstanding.............. $26,949,739
-----------
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 119
<PAGE>
GLOBAL NATURAL RESOURCES PORTFOLIO
STATEMENT OF OPERATIONS
May 31, 1994 (commencement of operations) to October 31, 1994
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Investment income (Note 1):
Dividends (net of foreign withholding tax of $1,604).................................................... $ 181,185
Interest................................................................................................ 41,311
---------
Total investment income................................................................................. 222,496
---------
Expenses:
Investment management and administration fees (Note 2).................................................. 28,500
Custodian fees.......................................................................................... 14,717
Professional fees....................................................................................... 27,770
Trustees' fees (Note 2)................................................................................. 2,908
Printing and postage expenses........................................................................... 7,650
Amortization of organizational expenses (Note 1)........................................................ 2,110
Other................................................................................................... 1,530
---------
Total expenses.......................................................................................... 85,185
---------
Net investment income..................................................................................... 137,311
---------
Net realized and unrealized gain (loss) on investments and foreign currencies (Note 1):
Net realized loss on investments............................................................. $(180,800)
Net realized gain on foreign currency conversions............................................ 50,541
---------
Net realized loss....................................................................................... (130,259)
Increase in unrealized depreciation of dividends receivable, securities purchased and sold,
and foreign currency conversions............................................................ (4,739)
Increase in unrealized appreciation of investments........................................... 678,591
---------
Net unrealized appreciation............................................................................. 673,852
---------
Net realized and unrealized gain on investments and foreign currency conversions.......................... 543,593
---------
Net increase in net assets resulting from operations...................................................... $ 680,904
---------
---------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 120
<PAGE>
GLOBAL NATURAL RESOURCES PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MAY 31, 1994
(COMMENCEMENT OF OPERATIONS)
TO OCTOBER 31, 1994
-----------------------------
<S> <C>
Increase in net assets
Operations:
Net investment income..............................................................................
$ 137,311
Net realized loss on investments and foreign currency conversions..................................
(130,259)
Increase in unrealized appreciation of investments, dividends receivable, securities purchased and
sold and foreign currency conversions.............................................................
673,852
------------
Net increase in net asssets resulting from operations..............................................
680,904
Beneficial interest transactions:
Contributions......................................................................................
33,302,836
Withdrawals........................................................................................
(7,134,101)
------------
Net increase from beneficial interest transactions.................................................
26,168,735
------------
Total increase in net assets.........................................................................
26,849,639
Net assets:
Beginning of period................................................................................
100,100
------------
End of period......................................................................................
$ 26,949,739*
------------
------------
<FN>
- ----------------
* Includes undistributed net investment income of $137,311.
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 121
<PAGE>
GLOBAL NATURAL RESOURCES PORTFOLIO
SUPPLEMENTARY DATA
- --------------------------------------------------------------------------------
Contained below are ratios and supplemental data that have been derived from
information provided in the financial statements.
<TABLE>
<CAPTION>
MAY 31, 1994
(COMMENCEMENT OF OPERATIONS)
TO OCTOBER 31, 1994
----------------------------
<S> <C>
Ratios and supplemental data:
Net assets, end of period (in 000's)................................................................. $26,950
Ratio of net investment income to average net assets................................................. 3.47%(a)
Ratio of operating expenses to average net assets.................................................... 2.15%(a)
Portfolio turnover rate.............................................................................. 137%
<FN>
- ----------------
(a) Annualized.
</TABLE>
Statement of Additional Information Page 122
<PAGE>
GLOBAL NATURAL RESOURCES PORTFOLIO
NOTES TO
FINANCIAL STATEMENTS
October 31, 1994
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
Global Natural Resources Portfolio ("Portfolio") is organized as a New York
Trust and is registered under the Investment Company Act of 1940, as amended
("1940 Act"), as a non-diversified, open-end management investment company. The
following is a summary of significant accounting policies consistently followed
by the Portfolio in the preparation of the financial statements. The policies
are in conformity with generally accepted accounting principles.
(A) PORTFOLIO VALUATION
The Portfolio calculates the net asset value of and completes orders to
purchase, exchange or repurchase Portfolio shares of beneficial interest 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 services 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 fluctuations, 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
Portfolio's Board of Trustees.
Portfolio securities which are primarily traded on foreign exchanges are
generally valued at the preceding closing values of such securities on their
respective exchanges, and those values are then translated into U.S. dollars at
the current exchange 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 Portfolio's Board of Trustees.
(B) FOREIGN CURRENCY TRANSLATION
The accounting records of the Portfolio 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 Portfolio 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.
In addition, the Fund may focus its investments in certain related natural
resources industries, subjecting the Fund to greater risk than a fund that is
more diversified.
Statement of Additional Information Page 123
<PAGE>
GLOBAL NATURAL RESOURCES PORTFOLIO
(C) REPURCHASE AGREEMENTS
With respect to repurchase agreements entered into by the Portfolio, it is the
Portfolio's policy to always receive, as collateral, United States government
securities or other high quality debt securities of which the value, including
accrued interest, is at least equal to the amount to be paid to the Portfolio
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 Portfolio as an unrealized gain or loss. When the Forward is closed, the
Portfolio 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
Portfolio 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
Portfolio 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 Portfolio writes a call or put option, an amount equal to the premium
received is included in the Portfolio's "Statement of Assets and Liabilities" as
an asset and an equivalent liability. The amount of the liability is
subsequently marked-to-market to reflect the current market value of the option.
The current market value of an option listed on a traded exchange is valued at
its last 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 Portfolio enters into a closing purchase
transaction, a gain or loss is realized without regard to any unrealized gain or
loss on the underlying security, and the liability related to such option is
extinguished. If a written call option is exercised, a gain or loss is realized
from the sale of the underlying security and the proceeds of the sale are
increased by the premium originally received. If a written put option is
exercised, the cost of the underlying security purchased would be decreased by
the premium originally received. The Portfolio can write options only on a
covered basis, which for a call requires that the Portfolio holds the underlying
security and for a put requires the Portfolio to set aside cash, U.S. government
securities or other liquid, high-grade debt securities in an amount not less
than the exercise price or otherwise provide adequate cover at all times while
the put option is outstanding. At October 31, 1994, the Portfolio had no written
options.
The premium paid by the Portfolio for the purchase of a call or put option is
included in the Portfolio's "Statement of Assets and Liabilities" as an
investment and subsequently "marked-to-market" to reflect the current market
value of the option. If an option which the Portfolio has purchased expires on
the stipulated expiration date, the Portfolio realizes a loss in the amount of
the cost of the option. If the Portfolio enters into a closing sale transaction,
the Portfolio realizes a gain or loss, depending on whether proceeds from the
closing sale transaction are greater or less than the cost of the option. If the
Portfolio exercises a call option, the cost of the securities acquired by
exercising the call is increased by the premium paid to buy the call. If the
Portfolio exercises a put option, it realizes a gain or loss from the sale of
the underlying security, and the proceeds from such sale are decreased by the
premium originally paid. At October 31, 1994, the Portfolio had no outstanding
purchased options.
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
Portfolio is required to pledge to the broker an amount of cash or securities
equal to the minimum "initial margin" requirements of the exchange on which the
contract is traded. Pursuant to the contract, the Portfolio agrees to receive
from or pay to the broker an amount of cash equal to the daily fluctuation in
value of the contract. Such receipts or payments are known as "variation margin"
and are recorded by the Portfolio as unrealized gains or losses. When the
contract is closed, the Portfolio records a realized gain or loss equal to the
difference between the value of the contract at the time it was opened and the
value at the time it was closed. The potential risk to the Portfolio is that the
change in value of the underlying securities may not correlate to the change in
value of the contracts. At October 31, 1994, the Portfolio did not hold futures
contracts.
Statement of Additional Information Page 124
<PAGE>
GLOBAL NATURAL RESOURCES PORTFOLIO
(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. 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 Portfolio may trade securities on other than normal
settlement terms. This may increase the risk if the other party to the
transaction fails to deliver and causes the Portfolio to subsequently invest at
less advantageous prices.
(H) PORTFOLIO SECURITIES LOANED
At October 31, 1994, stocks with an aggregate value of approximately $294,040
were on loan to brokers. The loans were secured by cash collateral of $316,200.
For international securities, cash collateral is received by the Portfolio
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 Portfolio 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 the loan. For
the period ended October 31, 1994, the Portfolio received $40 of income from
securities lending which was used to offset the Portfolio's custody expenses.
(I) TAXES
It is the policy of the Portfolio to meet the requirements of the Internal
Revenue Code of 1986, as amended ("Code"). Therefore, no provision has been made
for Federal taxes on income, capital gains, or unrealized appreciation of
securities held.
(J) DEFERRED ORGANIZATIONAL EXPENSES
Expenses incurred by the Portfolio 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 $25,000. These expenses
are being amortized on a straightline basis over a five-year period.
(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 Portfolio'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.
(L) INDEXED SECURITIES
The Portfolio may invest in indexed securities whose value is linked either
directly or indirectly to changes in foreign currencies, interest rates,
equities, indices, or other reference instruments. Indexed securities may be
more volatile than the reference instrument itself, but any loss is limited to
the amount of the original investment.
2. RELATED PARTIES
G.T. Capital is the Portfolio's investment manager and administrator. The
Portfolio pays investment management and administration fees to G.T. Capital at
the annualized rate of 0.725% on the first $500 million of average daily net
assets of the Portfolio; 0.70% on the next $500 million; 0.675% on the next $500
million; and 0.65% on amounts thereafter. These fees are computed daily and paid
monthly.
The Portfolio pays each of its Trustees who is not an employee, officer or
director of G.T. Capital, G.T. Global Financial Services, Inc. or G.T. Global
Investor Services, Inc. $500 per year plus $150 for each meeting of the board or
any committee thereof attended by the Trustees.
At October 31, 1994, all of the shares of beneficial interest of the Portfolio
were owned either by G.T. Global Natural Resources Fund or G.T. Capital.
3. PURCHASES AND SALES OF SECURITIES
For the period ended October 31, 1994, purchases and sales of investment
securities by the Portfolio, other than U.S. government obligations and
short-term investments, aggregated $37,150,485 and $14,165,894, respectively.
There were no purchases or sales of U.S. government obligations by the Portfolio
for the period ended October 31, 1994.
Statement of Additional Information Page 125
<PAGE>
G.T. GLOBAL HEALTH CARE 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 Health Care Fund, one of the funds organized as a series of G.T.
Investment Funds, Inc., including the portfolio of 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 five years in the period then
ended. These financial statements and the financial highlights are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and the financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and the financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
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 Health Care 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 five years in the period then ended, in conformity with generally accepted
accounting principles.
COOPERS & LYBRAND L.L.P.
BOSTON, MASSACHUSETTS
DECEMBER 16, 1994
Statement of Additional Information Page 126
<PAGE>
G.T. GLOBAL HEALTH CARE FUND
PORTFOLIO OF INVESTMENTS
October 31, 1994
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market % of Net
Equity Investments Country Shares Value Assets(a)
<S> <C> <C> <C> <C>
- ---------------------------------------------------------------------------
Health Care Services (37.9%)
- ---------------------------------------------
United Healthcare
Corporation US 540,000 $28,485,000 6.0
Columbia/HCA
Healthcare
Corporation US 435,000 18,106,875 3.8
Pacificare Health
Systems Inc. Class B
(c) US 180,000 13,140,000 2.7
Humana, Inc. US 400,000 9,750,000 2.0
U.S. Healthcare, Inc. US 200,000 9,450,000 2.0
Integrated Health
Services, Inc. US 200,000 8,150,000 1.7
Health Care &
Retirement
Corporation (c) US 300,000 8,062,500 1.7
Health Management
Associates, Inc.
Class A (c) US 300,000 7,800,000 1.7
Value Health, Inc.
(c) US 200,000 7,750,000 1.7
Pacificare Health
Systems Inc. Class A
(c) US 81,000 6,034,500 1.3
Amersham
International PLC UK 350,000 5,621,524 1.2
Physician Corporation
of America (c) US 225,000 5,428,125 1.1
Wellpoint Health
Network, Inc. Class
A (c) US 180,000 4,950,000 1.0
HBO & Company US 150,000 4,875,000 1.0
Pyxis Corporation (c) US 235,000 4,523,575 0.9
Vencor, Inc. (c) US 150,000 4,481,250 0.9
Sierra Health
Services, Inc. (c) US 130,000 4,225,000 0.9
Health Systems
International, Inc.
Class A (c) US 150,000 4,031,250 0.8
Coventry Corporation
(c) US 151,100 3,777,500 0.8
National Medical
Enterprises US 250,000 3,625,000 0.8
Grupo Casa Autrey
S.A. de C.V.
Sponsored ADR (b) MEX 100,000 3,050,000 0.6
<CAPTION>
Market % of Net
Equity Investments Country Shares Value Assets(a)
<S> <C> <C> <C> <C>
- ---------------------------------------------------------------------------
Living Centers of
America, Inc. (c) US 100,000 $3,012,500 0.6
SRL Inc. JPN 129,000 2,877,323 0.6
Hillhaven Corporation
(c) US 100,000 2,227,319 0.5
Multicare Companies,
Inc. (c) US 100,000 2,062,500 0.4
Healthsource, Inc.
(c) US 50,000 1,937,500 0.4
Regency Health
Services, Inc. (c) US 137,900 1,568,613 0.3
Inphynet Medical
Management, Inc. (c) US 130,000 1,527,500 0.3
Quorum Health Group,
Inc. (c) US 50,000 1,137,500 0.2
--------------
181,667,854
--------------
Pharmaceuticals (31.7%)
- ---------------------------------------------
Pfizer, Inc. US 225,000 16,678,125 3.5
Bayer AG GER 45,000 10,533,826 2.2
Astra AB-B Free SWDN 390,000 10,421,132 2.2
Eli Lilly & Company US 150,000 9,300,000 2.0
Astra AB-A Free SWDN 284,330 7,696,466 1.6
Warner-Lambert Co. US 100,000 7,625,000 1.6
Rhone-Poulenc "A" FR 300,000 7,402,370 1.5
Elan Corporation, PLC
ADR (b)(c) IRL 200,000 7,375,000 1.5
Santen Pharmaceutical JPN 266,000 7,059,273 1.5
Schering AG GER 10,000 6,681,966 1.4
Sankyo Co. Ltd. JPN 200,000 5,204,461 1.1
Ethical Holdings PLC
Sponsored ADR (b)(c) UK 730,000 5,201,250 1.1
Ares-Serono Group
Class B SWTZ 9,220 4,999,680 1.0
Takeda Chemical
Industries JPN 400,000 4,956,629 1.0
Mylan Laboratories US 175,000 4,900,600 1.0
American Home
Products US 75,000 4,769,000 1.0
Forest Laboratories
Inc. Class A (c) US 100,000 4,600,000 1.0
Roche Holdings AG
Genusscheine SWTZ 1,000 4,453,748 0.9
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 127
<PAGE>
G.T. GLOBAL HEALTH CARE FUND
<TABLE>
<CAPTION>
Market % of Net
Equity Investments Country Shares Value Assets(a)
- ---------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Teva Pharmaceuticals
Ind. ADR (b) ISRL 150,000 $4,087,500 0.9
Yamanouchi
Pharmaceutical JPN 200,000 3,944,651 0.8
Rhone-Poulenc S.A.
ADR (b) FR 125,000 3,062,500 0.6
Allergan, Inc. US 100,000 2,637,500 0.6
Matrix
Pharmaceutical, Inc.
(c) US 163,000 2,344,245 0.5
Roberts
Pharmaceutical
Corporation (c) US 85,000 2,295,000 0.5
Elan Corporation, PLC
ADR Units (b)(c) IRL 63,715 1,847,735 0.4
Roussel Uclaf FR 7,100 793,180 0.2
Therapeutic Discovery
Corporation (Units)
(c) US 100,000 562,500 0.1
--------------
151,433,337
--------------
Medical Technology & Supplies (10.8%)
- -------------------------------------------------------------
Medtronic, Inc. US 255,000 13,293,375 2.8
Sulzer AG
(Registered) SWTZ 12,000 8,478,469 1.8
Nellcor, Inc. (c) US 200,000 6,200,000 1.3
Ventritex, Inc. (c) US 200,000 5,200,000 1.1
Target Therapeutics,
Inc. (c) US 100,000 3,175,253 0.7
Sofamor Danek Group,
Inc. (c) US 175,000 2,931,079 0.6
Fresenius AG
(Preferred) GER 6,975 2,923,069 0.6
Haemonetics
Corporation (c) US 100,000 2,000,000 0.4
Cellpro, Inc. (c) US 100,000 1,675,000 0.4
Technol Medical
Products, Inc. (c) US 100,000 1,600,000 0.3
Molecular Dynamics,
Inc. (c) US 190,000 1,448,750 0.3
Cardiovascular
Imaging Systems (c) US 100,000 925,000 0.2
Orthologic
Corporation (c) US 165,000 639,375 0.1
Anesta Corporation
(c) US 100,000 637,500 0.1
Resound Corporation
(c) US 50,000 500,000 0.1
--------------
51,626,870
--------------
<CAPTION>
Market % of Net
Equity Investments Country Shares Value Assets(a)
<S> <C> <C> <C> <C>
- ---------------------------------------------------------------------------
Biotechnology (10.8%)
- ---------------------------------------------
Amgen, Inc. (c) US 225,000 $12,543,750 2.6
Chiron Corporation
(c) US 175,000 11,790,625 2.5
Genentech, Inc. (c) US 125,000 6,343,750 1.3
Protein Design
Laboratories, Inc.
(c) US 300,000 5,175,000 1.1
Genetics Institute,
Inc. (c) US 83,000 3,361,500 0.7
Genzyme Corporation
(c) US 100,000 3,275,000 0.7
Cor Therapeutics,
Inc. (c) US 200,000 2,600,000 0.5
Biogen, Inc. (c) US 50,000 2,450,000 0.5
Somatix Therapy
Corporation (c) US 250,000 1,250,000 0.3
Alpha-Beta
Technology, Inc. (c) US 100,000 925,000 0.2
Gilead Sciences Inc. US 93,000 790,500 0.2
SciClone
Pharmaceuticals,
Inc. US 90,000 551,250 0.1
Ribi Immunochem
Research, Inc. US 100,000 462,500 0.1
Enzon, Inc.
(Preferred) US 16,000 90,000 --
--------------
51,608,875
- ---------------------------------------------------------------------------
- ---------------------------------------------------------------------------
Total Equity Investments (cost
$340,425,293)............................... 436,336,936 91.2
- ---------------------------------------------------------------------------
- ---------------------------------------------------------------------------
Warrants
- ---------------------------------------------
Pharmaceuticals (0.1%)
- ---------------------------------------------
Roche Holdings AG Wts
expire 12/5/94 (cost
$0) SWTZ 3,500 387,959 0.1
- ---------------------------------------------------------------------------
- ---------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 128
<PAGE>
G.T. GLOBAL HEALTH CARE FUND
<TABLE>
<CAPTION>
Market % of Net
Short-Term Investment Value Assets(a)
- ---------------------------------------------------------------------------
<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
$35,115,000 U.S. Treasury Bond, 8.125% due
8/15/19. (Market value $36,333,171 including
accrued interest.)
(cost $35,732,664)..........................
$35,732,664 7.5
- ---------------------------------------------------------------------------
- ---------------------------------------------------------------------------
Total Investments
(cost $376,157,957)*........................ 472,457,559 98.8
Other Assets Less Liabilities................ 5,582,734 1.2
- ---------------------------------------------------------------------------
Net Assets................................... $478,040,293 100.0
- ---------------------------------------------------------------------------
- ---------------------------------------------------------------------------
<FN>
- --------------------------------------------------------------------------------
(a) Percentages indicated are based on net assets of $478,040,293.
(b) U.S. currency denominated.
(c) Non-income producing security.
Abbreviation:
ADR -- American Depository Receipt
* For Federal income tax purposes, cost is $376,883,864 and appreciation
(depreciation) of securities is as follows:
Unrealized appreciation: $ 108,987,337
Unrealized depreciation: (13,413,642)
-------------
Net unrealized appreciation: $ 95,573,695
-------------
-------------
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
FORWARD FOREIGN CURRENCY CONTRACT OUTSTANDING
OCTOBER 31, 1994
<TABLE>
<CAPTION>
Contract Delivery Unrealized
Contract to Sell Market Value Price Date (Depreciation)
- ------------------------------------------------------------------------------- ------------ --------- --------- -------------
<S> <C> <C> <C> <C>
Japanese Yen (Receivable amount $7,881,269).................................... $8,008,104 97.7000 01/18/95 ($ 126,835)
------------ -------------
------------ -------------
The value of Contract to Sell as a percentage of Net Assets is 1.7%.
<FN>
- ----------------
See Note 1 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)
-------------------------------------------------------------------
Country Equity Warrants Short-Term Other Total
- ---------------------------- ----------- ------------- --------------- ----------- ---------
<S> <C> <C> <C> <C> <C>
France...................... 2.3 2.3
Germany..................... 4.2 4.2
Ireland..................... 1.9 1.9
Israel...................... 0.9 0.9
Japan....................... 5.0 5.0
Mexico...................... 0.6 0.6
Sweden...................... 3.8 3.8
Switzerland................. 3.7 0.1 3.8
UK.......................... 2.3 2.3
U.S......................... 66.5 7.5 1.2 75.2
-- --
--- --- ---------
Total....................... 91.2 0.1 7.5 1.2 100.0
-- --
-- --
--- --- ---------
--- --- ---------
<FN>
- ----------------
(a) Percentages indicated are based on net assets of $478,040,293.
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 129
<PAGE>
G.T. GLOBAL HEALTH CARE FUND
STATEMENT OF ASSETS
AND LIABILITIES
October 31, 1994
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Assets:
<S> <C> <C>
Investments in securities, at value (cost $376,157,957) (Note 1).................................... $ 472,457,559
U.S. currency..........................................................................
$ 598
Foreign currency (cost $9,611).........................................................
10,087 10,685
-----------
Receivable for securities sold...................................................................... 12,940,698
Receivable for Fund shares sold..................................................................... 8,446,437
Dividends and dividend tax reclaims receivable...................................................... 506,144
Cash held as collateral for securities loaned (Note 1).............................................. 73,360,463
-------------
Total assets........................................................................................ 567,721,986
-------------
Liabilities:
Payable for securities purchased.................................................................... 12,601,383
Payable for Fund shares repurchased................................................................. 2,543,018
Payable for investment management and administration fees (Note 2).................................. 379,381
Payable for service and distribution expenses (Note 2).............................................. 211,960
Payable for transfer agent fees (Note 2)............................................................ 185,060
Payable for open forward foreign currency contracts, net (Note 1)................................... 126,835
Payable for printing and postage expenses........................................................... 102,308
Payable for registration fees....................................................................... 55,298
Payable for custodian fees (Note 1)................................................................. 43,820
Payable for professional fees....................................................................... 40,869
Payable for Directors' fees (Note 2)................................................................ 5,992
Accrued expenses.................................................................................... 25,306
Collateral for securities loaned (Note 1)........................................................... 73,360,463
-------------
Total liabilities................................................................................... 89,681,693
-------------
Net assets............................................................................................ $ 478,040,293
-------------
-------------
Class A:
Net asset value and redemption price per share
($438,939,891 DIVIDED BY 22,399,890 shares outstanding)............................................. $ 19.60
-------------
-------------
Maximum offering price per share
(100/95.25 of $19.60)*............................................................................... $ 20.58
-------------
-------------
Class B:+
Net asset value and offering price per share
($39,100,402 DIVIDED BY 2,009,174 shares outstanding)............................................... $ 19.46
-------------
-------------
Net assets consist of:
Paid in capital (Note 4)............................................................................ $ 373,443,591
Accumulated net realized gain on investments, options, foreign currency conversions and forward
foreign currency contracts......................................................................... 8,399,184
Net unrealized appreciation of investments, dividends and dividend withholding tax reclaims
receivable,
securities purchased and sold, foreign currency conversions and forward foreign currency 96,197,518
contracts..........................................................................................
-------------
Total -- representing net assets applicable to capital shares outstanding........................... $ 478,040,293
-------------
-------------
<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 130
<PAGE>
G.T. GLOBAL HEALTH CARE 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 $198,736)............................................. $ 2,254,873
Interest.............................................................................................. 1,051,142
-----------
Total investment income............................................................................... 3,306,015
-----------
Expenses:
Investment management and administration fees (Note 2)................................................ 4,353,688
Service and distribution expenses: (Note 2)
Class A................................................................................ $ 2,102,985
Class B................................................................................ 259,350 2,362,335
-----------
Transfer agent fees (Note 2).......................................................................... 1,630,985
Printing and postage expenses......................................................................... 227,783
Custodian fees (Note 1)............................................................................... 193,956
Registration fees..................................................................................... 82,195
Professional fees..................................................................................... 76,415
Amortization of organizational expenses (Note 1)...................................................... 10,194
Directors' fees (Note 2).............................................................................. 5,520
Other................................................................................................. 11,135
-----------
Total net expenses.................................................................................... 8,954,206
-----------
Net investment loss..................................................................................... (5,648,191)
-----------
Net realized and unrealized gain on investments and foreign currencies (Note 1):
Net realized gain on investments and options............................................. 59,524,645
Net realized loss on foreign currency conversions and forward foreign currency
contracts............................................................................... (1,566,518)
-----------
Net realized gain..................................................................................... 57,958,127
Change in unrealized depreciation of dividends and dividend withholding tax reclaims
receivable, securities purchased and sold, foreign currency conversions and forward
foreign currency contracts.............................................................. (2,695,118)
Change in unrealized depreciation of investments......................................... (4,582,027)
-----------
Net unrealized depreciation........................................................................... (7,277,145)
-----------
Net realized and unrealized gain on investments, options and foreign currencies......................... 50,680,982
-----------
Net increase in net assets resulting from operations.................................................... $45,032,791
-----------
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 131
<PAGE>
G.T. GLOBAL HEALTH CARE 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 loss.......................................................................... $ (5,648,191) $ (4,772,367)
Net realized gain (loss) on investments, options, foreign currency conversions and forward
foreign currency contracts.................................................................. 57,958,127 (2,036,715)
Change in unrealized appreciation (depreciation) of investments, dividends and dividend
withholding tax reclaims receivable, securities purchased and sold, foreign currency
conversions and forward foreign currency contracts.......................................... (7,277,145) 10,173,946
---------------- ----------------
Net increase in net assets resulting from operations......................................... 45,032,791 3,364,864
Class A:+
Distributions to shareholders from: (Note 1)
In excess of net realized gain on investments................................................ (1,492,549) 0
Class B:++
Distributions to shareholders from: (Note 1)
In excess of net realized gain on investments................................................ (28,033) 0
Capital share transactions (Note 4):
Increase from capital shares sold and reinvested............................................. 785,204,559 606,277,692
Decrease from capital shares repurchased..................................................... (820,493,437) (795,692,625)
---------------- ----------------
Net decrease from capital share transactions................................................. (35,288,878) (189,414,933)
---------------- ----------------
Total increase (decreased) in net assets....................................................... 8,223,331 (186,050,069)
Net assets:
Beginning of year............................................................................ 469,816,962 655,867,031
---------------- ----------------
End of year.................................................................................. $ 478,040,293* $ 469,816,962**
---------------- ----------------
---------------- ----------------
<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.
* Includes undistributed net investment income of $0.
** Includes undistributed net investment loss of $(11,063,638).
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 132
<PAGE>
G.T. GLOBAL HEALTH CARE 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+
------------------------------------------------
<S> <C> <C> <C> <C> <C>
YEAR ENDED OCTOBER 31,
------------------------------------------------
1994* 1993* 1992 1991 1990
-------- -------- -------- -------- --------
Per Share Operating Performance:
Net asset value, beginning of
period....................................... $ 17.86 $ 17.44 $ 19.29 $ 12.83 $ 11.83
-------- -------- -------- -------- --------
Income from investment operations:
Net investment income (loss)................ (0.22) (0.15) (0.18) 0.03 0.06
Net realized and unrealized gain (loss) on
investments................................ 2.02 0.57 (1.53) 6.78 0.97
-------- -------- -------- -------- --------
Net increase (decrease) from investment
operations................................. 1.80 0.42 (1.71) 6.81 1.03
-------- -------- -------- -------- --------
Distributions:
Net investment income....................... (0.00) (0.00) (0.00) (0.07) (0.03)
Net realized gain on investments............ (0.00) (0.00) (0.14) (0.28) (0.00)
In excess of net realized gain on
investments................................ (0.06) (0.00) (0.00) (0.00) (0.00)
-------- -------- -------- -------- --------
Total distributions....................... (0.06) (0.00) (0.14) (0.35) (0.03)
-------- -------- -------- -------- --------
Net asset value, end of period................ $ 19.60 $ 17.86 $ 17.44 $ 19.29 $ 12.83
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
Total investment return (c)................... 10.11% 2.4% (8.9)% 54.2% 8.7%
Ratios and supplemental data:
Net assets, end of year (in 000's)............ $438,940 $461,113 $655,867 $552,897 $145,544
Ratio of net investment income (loss) to
average net assets........................... (1.23)% (0.9)% (1.0)% 0.2% 0.7%
Ratio of expenses to average net assets....... 1.98% 2.0% 2.1% 2.0% 2.4%
Portfolio turnover rate +++................... 64% 61% 30% 23% 34%
<CAPTION>
CLASS B++
-----------------------------------
<S> <C> <C>
APRIL 1, 1993+
YEAR ENDED TO OCTOBER 30,
OCTOBER 31, 1994* 1993*
----------------- ---------------
Per Share Operating Performance:
Net asset value, beginning of
period....................................... $ 17.80 $15.59
-------- -------
Income from investment operations:
Net investment income (loss)................ (0.32) (0.14)
Net realized and unrealized gain (loss) on
investments................................ 2.02 2.35
-------- -------
Net increase (decrease) from investment
operations................................. 1.70 2.21
-------- -------
Distributions:
Net investment income....................... (0.00) (0.00)
Net realized gain on investments............ (0.00) (0.00)
In excess of net realized gain on
investments................................ (0.04) (0.00)
-------- -------
Total distributions....................... (0.04) (0.00)
-------- -------
Net asset value, end of period................ $ 19.46 $17.80
-------- -------
-------- -------
Total investment return (c)................... 9.55% 14.2%(a)
Ratios and supplemental data:
Net assets, end of year (in 000's)............ $39,100 $8,604
Ratio of net investment income (loss) to
average net assets........................... (1.73)% (1.4)%(b)
Ratio of expenses to average net assets....... 2.48% 2.5%(b)
Portfolio turnover rate +++................... 64% 61%
<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.
* These selected per share data were calculated based upon weighted average
shares outstanding during the period.
(a) Not annualized.
(b) Annualized.
(c) Total investment return does not include sales charges.
</TABLE>
Statement of Additional Information Page 133
<PAGE>
G.T. GLOBAL HEALTH CARE FUND
NOTES TO
FINANCIAL STATEMENTS
October 31, 1994
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
G.T. Global Health Care 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 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 of the Fund are maintained in U.S. dollars. The market
values of foreign securities, currency holdings, other assets and liabilities
are recorded in the books and records of the Fund after translation to U.S.
dollars based on the exchange rates 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.
In addition, the Fund may focus its investments in certain related health care
industries, subjecting the Fund to greater risk than a fund that is more
diversified.
Statement of Additional Information Page 134
<PAGE>
G.T. GLOBAL HEALTH CARE FUND
(C) REPURCHASE AGREEMENTS
With respect to repurchase agreements entered into by the Fund, it is the Fund's
policy to always receive, as collateral, United States government securities or
other high quality debt securities of which the value,
including accrued interest, is at least equal to the amount to be 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 set aside cash, U.S. government securities or other liquid, high grade
debt securities in an amount not less than the exercise price or otherwise
provide adequate cover at all times while the put option is outstanding. At
October 31, 1994, the Fund held no written option contracts.
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) 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.
(G) PORTFOLIO SECURITIES LOANED
At October 31, 1994, stocks with an aggregate value of approximately $67,530,974
were on loan to brokers. The loans were secured by cash collateral of
$73,360,463. 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
Statement of Additional Information Page 135
<PAGE>
G.T. GLOBAL HEALTH CARE FUND
to 102% of the market value of the loaned securities at the inception of each
loan. This collateral must be maintained at not less than 100% of the market
value of the loaned securities during the period of the loan. For the year ended
October 31, 1994, the Fund received $106,119 of income from securities lending
which was used to offset the Fund's custody expenses.
(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) DISTRIBUTION 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 due to differing treatments of income and 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 $85,951. These expenses
were amortized on a straightline basis over a five-year period and were fully
amortized at October 31, 1994.
(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 $(6,290,671) and $17,082,379
was reclassified from accumulated net investment loss and accumulated net
realized loss on investments and options, respectively, to paid-in capital. 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.
(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% 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
$131,040 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
Statement of Additional Information Page 136
<PAGE>
G.T. GLOBAL HEALTH CARE FUND
("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 $49,801. 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.
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 $266,952,940 and $320,104,904, respectively. There were
no purchases or sales of U.S. government obligations by the Fund for the year.
Statement of Additional Information Page 137
<PAGE>
G.T. GLOBAL HEALTH CARE 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 Strategic Income Fund; 200,000,000 were classified as shares of G.T.
Global Growth & Income Fund; 200,000,000 were classifed as G.T. Global Currency
Fund (inactive); 200,000,000 were classified as shares of G.T. Latin America
Growth Fund, and 200,000,000 were classified as shares of G.T. Global Small
Companies Fund (inactive); 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
Natural Resources Fund; 200,000,000 were classified as shares of G.T. Global
Infrastructure Fund; and 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
-------------------------- --------------------------
SHARES AMOUNT SHARES AMOUNT
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
CLASS A
Shares sold............................................................... 34,050,013 $ 640,715,739 35,297,478 $ 593,025,057
Shares issued in connection with reinvestment of distributions............ 59,903 1,108,216 0 0
----------- ------------- ----------- -------------
34,109,916 641,823,955 35,297,478 593,025,057
Shares repurchased........................................................ (37,533,619) (705,605,096) (47,076,381) (790,465,124)
----------- ------------- ----------- -------------
Net decrease.............................................................. (3,423,703) $ (63,781,141) (11,778,903) $(197,440,067)
----------- ------------- ----------- -------------
----------- ------------- ----------- -------------
<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............................................................... 7,582,598 $ 143,354,981 791,775 $ 13,252,635
Shares issued in connection with reinvestment of distributions............ 1,390 25,623 0 0
----------- ------------- ----------- -------------
7,583,988 143,380,604 791,775 13,252,635
Shares repurchased........................................................ (6,058,397) (114,888,341) (308,192) (5,227,501)
----------- ------------- ----------- -------------
Net increase.............................................................. 1,525,591 $ 28,492,263 483,583 $ 8,025,134
----------- ------------- ----------- -------------
----------- ------------- ----------- -------------
</TABLE>
Statement of Additional Information Page 138
<PAGE>
G.T. GLOBAL TELECOMMUNICATIONS 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 Telecommunications 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 January 27, 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 Telecommunications 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 January 27, 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 139
<PAGE>
G.T. GLOBAL TELECOMMUNICATIONS FUND
PORTFOLIO OF INVESTMENTS
October 31, 1994
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Equity Market % of Net
Investments Country Shares Value Assets(a)
<S> <C> <C> <C> <C>
- --------------------------------------------------------------------------
Telephone Networks (21.6%)
- -------------------------------------------
Telefonos de
Mexico, S.A.
de C.V.: MEX -- -- 3.1
"L" -- 17,235,000 $48,109,348 --
"L" ADR (b) -- 435,000 23,979,375 --
"A" -- 5,622,000 15,594,821 --
Telecomuni-
cacoes
Brasileiras
S.A. -
Telebras
(Preferred)
(c) BRZL 1,781,537,000 85,909,277 3.0
Stet (Societa
Finanziaria
Telefonica): ITLY -- -- 2.2
Ordinary -- 10,100,000 30,541,370 --
Savings -- 12,180,000 30,138,119 --
British
Telecommu-
nications PLC UK 8,702,000 56,077,655 2.0
Telefonica de
Espana SPN 3,850,000 52,185,125 1.8
Telecom Italia: ITLY -- -- 1.7
Ordinary -- 10,930,000 24,202,015 --
Savings -- 8,365,001 22,955,813 --
Compania de
Telefonos de
Chile ADR (b) CHLE 453,100 42,648,038 1.5
Tele Danmark
A.S.: DEN -- -- 1.5
ADR (b)(c) -- 937,100 26,941,625 --
"B" -- 238,133 13,726,762 --
Telecom
Corporation of
New Zealand
Ltd. NZ 9,936,000 34,641,953 1.2
Telecom
Argentina S.A.
"B" ARG 3,941,034 23,983,068 0.8
Pakistan
Telecommu-
nications
Company Ltd.
Vouchers 144A
(b)(d)(c) PAK 141,546 23,425,863 0.8
Royal PTT
Nederland N.V. NETH 401,000 12,764,493 0.5
<CAPTION>
Equity Market % of Net
Investments Country Shares Value Assets(a)
<S> <C> <C> <C> <C>
- --------------------------------------------------------------------------
Orient Telecom
& Technology
Holdings Ltd. HK 24,682,000 $11,179,885 0.4
Russian
Telecommu-
nications Dev.
Corp.
(b)(e)(c): RUS -- -- 0.3
Non-Voting -- 453,000 4,530,000 --
Voting -- 331,000 3,310,000 --
Atlantic Tele-
Network, Inc. US 638,700 6,387,000 0.2
Telecomasia
(Local) (c) THAI 1,257,000 5,044,141 0.2
Companhia
Portuguesa
Radio Marconi,
S.A. PORT 135,000 4,547,313 0.2
Compania
Peruana de
Telefonos "B"
(c) PERU 2,752,765 3,831,549 0.1
Thai Tele-
phone and
Telecommu-
nication
Public Co.
Ltd.: THAI -- -- 0.1
Local (c) -- 235,000 1,471,108 --
144A GDR
(b)(d)(c) -- 75,000 1,406,250 --
----------------
609,531,966
----------------
Telecom Equipment (17.1%)
- --------------------------------------------------------------------------
Nokia AB
(Preferred) FIN 800,540 120,688,785 4.3
Motorola, Inc. US 1,659,500 97,703,063 3.5
Alcatel Alsthom FR 491,352 45,058,897 1.6
Kyushu-
Matsushita
Electric
Industrial JPN 1,531,000 38,575,381 1.4
Glenayre
Technologies,
Inc. (c) US 563,500 35,077,875 1.2
ECI Telecommu-
nications Ltd.
(b) ISRL 1,338,800 25,939,250 0.9
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 140
<PAGE>
G.T. GLOBAL TELECOMMUNICATIONS FUND
<TABLE>
<CAPTION>
Equity Market % of Net
Investments Country Shares Value Assets(a)
- --------------------------------------------------------------------------
<S> <C> <C> <C> <C>
U.S. Robotics,
Inc. (c) US 636,000 $25,599,000 0.9
Telefonaktie-
bolaget LM
Ericsson "B"
Free SWDN 388,000 23,624,293 0.8
Champion
Technology
Holdings HK 62,809,163 20,321,277 0.7
Boston
Technology,
Inc. (c) US 914,200 15,084,300 0.5
International
Engineering
Public Com-
pany Ltd.
(Foreign) THAI 1,146,300 11,499,799 0.4
Tadiran Ltd.
(b) ISRL 415,200 8,771,100 0.3
Mitel Corpo-
ration (c) US 2,500,000 8,750,000 0.3
Netas
Telekomunik: TRKY -- -- 0.2
New (c) -- 9,900,000 3,518,955 --
Common -- 7,920,000 2,815,164 --
Prod-Art
Technology
Holdings Ltd. HK 41,604,300 3,122,860 0.1
----------------
486,149,999
----------------
Wireless Communications (10.1%)
- -------------------------------------------
DDI Corporation JPN 8,414 76,285,543 2.7
Advanced
Information
Service
(Foreign) THAI 2,986,050 52,723,192 1.9
Airtouch
Communica-
tions (c) US 1,000,000 29,875,000 1.1
United
Communication
Industry: THAI -- -- 1.1
Foreign -- 917,900 26,962,391 --
Local -- 66,000 1,949,278 --
Millicom
International
Cellular S.A.
(c) US 955,500 26,873,431 1.0
Vodafone Group
PLC UK 5,795,000 20,070,183 0.7
Telephone and
Data Systems,
Inc. US 315,600 15,622,200 0.6
Tele 2000 (c) PERU 5,472,293 15,159,729 0.5
Rogers Cantel
Mobile
Communica-
tions Class B
(c) CAN 382,000 11,674,875 0.4
<CAPTION>
Equity Market % of Net
Investments Country Shares Value Assets(a)
<S> <C> <C> <C> <C>
- --------------------------------------------------------------------------
ABC Com-
munications
Holdings Ltd. HK 6,498,000 $2,817,169 0.1
----------------
280,012,991
----------------
Telephone -- Regional/Local (7.8%)
- -------------------------------------------
Pacific Telesis
Group US 2,000,000 63,250,000 2.2
MFS Com-
munications
Company, Inc.
(c) US 1,422,900 52,647,300 1.9
Bell Atlantic
Corporation US 750,000 39,281,250 1.4
U.S. West, Inc. US 1,000,000 37,625,000 1.3
Alltel
Corporation US 670,000 17,336,250 0.6
Intermedia
Communica-
tions of
Florida, Inc.
(c) US 873,900 9,503,663 0.3
IntelCom Group,
Inc. US 215,000 3,278,750 0.1
----------------
222,922,213
----------------
Technology (7.1%)
- -------------------------------------------
Cisco Systems,
Inc. US 2,016,600 60,750,075 2.1
NETWORKING
Kyocera
Corporation JPN 584,000 44,505,576 1.6
SEMICONDUCTORS
Qualcomm, Inc.
(c) US 893,500 26,358,250 0.9
TELECOM TECHNOLOGY
NEC Corporation JPN 2,000,000 25,609,252 0.9
SEMICONDUCTORS
Fujitsu Ltd. JPN 2,000,000 22,924,410 0.8
COMPUTERS & PERIPHERALS
Shinawatra
Computer
Company, Ltd.: THAI -- -- 0.6
COMPUTERS & PERIPHERALS
Foreign -- 493,800 14,267,094 --
Local -- 81,900 2,550,337 --
AT&T Global
Info Solution
JP JPN 469,000 6,247,521 0.2
COMPUTERS & PERIPHERALS
I.I.S.
Intelligent
Information
Systems Ltd. ISRL 264,500 859,625 --
NETWORKING
----------------
204,072,140
----------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 141
<PAGE>
G.T. GLOBAL TELECOMMUNICATIONS FUND
<TABLE>
<CAPTION>
Equity Market % of Net
Investments Country Shares Value Assets(a)
- --------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Broadcasting & Publishing (7.0%)
- -------------------------------------------
Time Warner,
Inc. US 1,250,000 $44,375,000 1.6
Reuters
Holdings PLC UK 5,100,000 40,039,253 1.4
News Corpo-
ration Ltd.: AUSL -- -- 1.0
Common -- 3,814,562 23,523,935 --
ADR (b) -- 120,800 5,904,100 --
Elsevier N.V. NETH 1,525,000 15,548,310 0.5
Evergreen Media
Corporation
Class A (c) US 771,100 13,687,025 0.5
Canal Plus FR 82,676 13,637,444 0.5
Granada Group
PLC UK 1,500,000 12,733,071 0.5
International
Broadcasting
Corp. Ltd.: THAI -- -- 0.5
Foreign -- 1,373,700 10,308,261 --
Local -- 217,600 1,632,873 --
Sistem
Televisyen
Malaysia Bhd. MAL 3,718,000 8,732,824 0.3
Television
Broadcasts
Ltd. HK 1,067,000 4,929,714 0.2
Medya Holdings
AS TRKY 18,966,080 951,737 --
----------------
196,003,547
----------------
Telephone -- Long Distance (6.7%)
- -------------------------------------------
LDDS Communica-
tions, Inc.
(c) US 2,057,620 48,354,070 1.7
AT&T
Corporation US 635,500 34,952,500 1.2
IDB Communica-
tions Group,
Inc. (c) US 3,615,000 33,438,750 1.2
Philippine Long
Distance
Telephone
Company: PHIL -- -- 1.2
ADR (b) -- 478,495 27,274,215 --
Common -- 94,844 5,507,071 --
GN Store Nord
AS DEN 134,166 13,003,676 0.5
Call-Net
Enterprises,
Inc. (c): CAN -- -- 0.3
"B" -- 1,207,800 6,923,409 --
"A" -- 469,400 2,951,109 --
KDD JPN 84,100 8,641,006 0.3
<CAPTION>
Equity Market % of Net
Investments Country Shares Value Assets(a)
<S> <C> <C> <C> <C>
- --------------------------------------------------------------------------
WCT Communica-
tions, Inc.
(c) US 573,000 $3,366,375 0.1
Petersburg Long
Distance, Inc.
(b)(c)(e) CAN 310,000 2,596,250 0.1
Cam-Net
Communica-
tions Network,
Inc. (c) CAN 547,975 2,203,856 0.1
----------------
189,212,287
----------------
Capital Goods (6.5%)
- -------------------------------------------
Mannesmann AG GER 151,500 40,512,872 1.4
MACHINERY & ENGINEERING
Orbital
Sciences
Corporation
(c) US 1,417,500 30,830,625 1.1
AEROSPACE/DEFENSE
Canon Inc. JPN 1,600,000 29,739,776 1.0
OFFICE EQUIPMENT
Murata
Manufacturing
Co., Ltd. JPN 542,300 22,175,836 0.8
ELECTRICAL PLANT/EQUIPMENT
Alcatel Cable FR 133,813 15,598,951 0.6
INDUSTRIAL COMPONENTS
Olivetti Group ITLY 12,500,000 14,956,913 0.5
OFFICE EQUIPMENT
Leader
Universal
Holdings Bhd. MAL 1,649,000 9,166,489 0.3
INDUSTRIAL COMPONENTS
BICC PLC UK 1,500,000 8,292,446 0.3
ELECTRICAL PLANT/EQUIPMENT
PT Kabelmetal
Indonesia
(Local) INDO 5,100,000 7,337,707 0.3
INDUSTRIAL COMPONENTS
PT Kabelindo
Murni (Local) INDO 1,079,000 2,980,662 0.1
INDUSTRIAL COMPONENTS
PT Voksel
Electronics
(Foreign) INDO 1,106,700 1,936,215 0.1
INDUSTRIAL COMPONENTS
----------------
183,528,492
----------------
Cable Television (3.7%)
- -------------------------------------------
Comcast
Corporation
Class A US 2,840,000 46,505,000 1.6
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 142
<PAGE>
G.T. GLOBAL TELECOMMUNICATIONS FUND
<TABLE>
<CAPTION>
Equity Market % of Net
Investments Country Shares Value Assets(a)
- --------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Tele-Communica-
tions, Inc.
Class A (c) US 1,692,500 $38,292,813 1.4
Rogers
Communica-
tions, Inc.
Class B (c) CAN 1,001,400 14,721,024 0.5
International
CableTel, Inc.
(c) US 145,400 4,507,400 0.2
----------------
104,026,237
----------------
Consumer Durables (2.8%)
- -------------------------------------------
Sony Corp. JPN 750,000 45,771,375 1.5
CONSUMER ELECTRONICS
Amcol Hold-
ings Ltd. SING 10,644,000 24,652,313 0.9
CONSUMER ELECTRONICS
Edaran Otomobil
Nasional Bhd. MAL 1,426,000 10,159,795 0.4
AUTOMOBILES
----------------
80,583,483
----------------
Multi-Industry (2.4%)
- -------------------------------------------
Grupo Carso,
S.A. de C.V.
"A1" (c) MEX 4,341,000 46,230,634 1.6
Pearson PLC UK 2,300,000 23,850,179 0.8
----------------
70,080,813
----------------
Services (1.1%)
- -------------------------------------------
Compagnie
Generale des
Eaux FR 140,118 12,835,756 0.5
CONSUMER SERVICES
Sapura
Telecommu-
nications Bhd. MAL 2,365,000 10,832,059 0.4
VALUE ADDED TELEPHONE SERVICE
Radiotronica
S.A. SPN 257,500 3,500,600 0.1
TELECOM - OTHER
Grupo Mexicano
de Video ADR
(b)(e) MEX 122,000 2,165,500 0.1
LEISURE & TOURISM
Gran Cadena de
Almacenes
Colombianos COL 64,000 122,312 --
RETAILERS-OTHER
----------------
29,456,227
----------------
<CAPTION>
Equity Market % of Net
Investments Country Shares Value Assets(a)
<S> <C> <C> <C> <C>
- --------------------------------------------------------------------------
Investment Management (0.1)
- -------------------------------------------
Phatra Thanakit
Co. Ltd.
(Foreign) THAI 223,900 $2,300,096 0.1
- --------------------------------------------------------------------------
- --------------------------------------------------------------------------
Total Equity Investments
(cost $2,345,081,166)..................... 2,657,880,491 94.0
- --------------------------------------------------------------------------
- --------------------------------------------------------------------------
Warrants (0.0%)
- -------------------------------------------
Stet Wts expire
9/30/96 ITLY 69,000 1,186,831 --
TELEPHONE NETWORKS
American
Satellite
Network Wts
expire 1/1/99
(c)(e) US 65,825 0 --
WIRELESS COMMUNICATIONS
- --------------------------------------------------------------------------
- --------------------------------------------------------------------------
Total Warrants (cost $439,365)............. 1,186,831 --
- --------------------------------------------------------------------------
- --------------------------------------------------------------------------
Rights (0.3%)
- -------------------------------------------
Phatra Thanakit
Co. Ltd.
(Foreign)
Rights expire
11/3/94 (c)
(cost
$3,766,184) THAI 895,600 8,840,995 0.3
INVESTMENT MANAGEMENT
- --------------------------------------------------------------------------
- --------------------------------------------------------------------------
<CAPTION>
Option on
Currency (0.2%) Currency
<S> <C> <C> <C> <C>
- --------------------------
USD Call/ JPY
Put Option,
Strike 100,
expires
10/9/95 (cost
$8,430,000) USD 300,000,000 4,980,000 0.2
- --------------------------------------------------------------------------
- --------------------------------------------------------------------------
Structured Note (0.4%)
- -------------------------------------------
Credit Suisse
Synthetic
Equity MTN,
3.25% due
4/29/97 (cost
$7,000,000)
(This is an
equity linked
note. The
value of this
note is linked
to the
underlying
value of
Rostelecom.) USD 7,000,000 11,550,000 0.4
- --------------------------------------------------------------------------
- --------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 143
<PAGE>
G.T. GLOBAL TELECOMMUNICATIONS FUND
<TABLE>
<CAPTION>
Short-Term Principal Market % of Net
Investments Currency Amount Value Assets(a)
- --------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Treasury Bills (1.8%)
- -------------------------------------------
Mexican Cetes
due:
11/3/94
(effective
yield 11.4%) MXN 79,051,410 $23,012,145 0.8
11/24/94
(effective
yield 15.8%) MXN 67,820,650 19,556,432 0.7
11/17/94
(effective
yield 16.0%) MXN 25,413,200 7,349,601 0.3
- --------------------------------------------------------------------------
Total Treasury Bills (cost $50,416,852)....
49,918,178 1.8
- --------------------------------------------------------------------------
<CAPTION>
Market % of Net
Repurchase Agreement (1.1%) Value Assets(a)
<S> <C> <C> <C> <C>
- --------------------------------------------------------------------------
Dated October 31, 1994 with State Street
Bank & Trust Company, due November 1,
1994, for an effective yield of 4.7%
collateralized by $31,095,000 Federal Home
Loan Mortgage Corporation Discount Note,
0% due 1/27/95. (Market value $30,690,822
including accrued interest) (cost
$30,690,006)..............................
$30,690,006 1.1
- --------------------------------------------------------------------------
- --------------------------------------------------------------------------
Total Short-Term Investments
(cost $81,106,858)........................ 80,608,184 2.9
- --------------------------------------------------------------------------
- --------------------------------------------------------------------------
Total Investments
(cost $2,445,823,573)*.................... 2,765,046,501 97.8
Other Assets Less Liabilities.............. 63,436,420 2.2
- --------------------------------------------------------------------------
- --------------------------------------------------------------------------
Net Assets................................. $2,828,482,921 100.0
- --------------------------------------------------------------------------
- --------------------------------------------------------------------------
<FN>
- --------------------------------------------------------------------------------
(a) Percentages indicated are based on net assets of $2,828,482,921.
(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) Restricted securities -- At October 31, 1994, the Fund owned the following
restricted securities constituting 0.5% of net assets which may not be
publicly sold without registration under the Securities Act of 1933. (Note
1)
Additional information on restricted securities is as follows:
AcquisitionDescription
Value Acquisition
--- Dates
----------------------
Shares
CostMarket
--
--------------- --------------
Russian Telecommunications Development Corporation:
Non Voting...................................................... 12/22/93 453,000 $ 4,530,000 $ 4,530,000
Voting.......................................................... 12/22/93 331,000 3,310,000 3,310,000
Grupo Mexicano de Video ADR....................................... 07/01/92 122,000 2,013,000 2,165,000
Petersburg Long Distance, Inc..................................... 02/11/93-10/5/93 310,000 2,236,250 2,596,250
American Satellite Network Wts expire 1/1/99...................... 12/31/93 65,825 -- --
------------- -------------
Total......................................................... $ 12,089,250 $ 12,601,250
------------- -------------
------------- -------------
Abbreviations:
ADR -- American Depository Receipt
GDR -- Global Depository Receipt
MTN -- Medium Term Note
* For Federal income tax purposes, cost is $2,446,743,346 and appreciation
(depreciation) of securities is as follows:
Unrealized appreciation: $ 475,856,937
Unrealized depreciation: (157,553,782)
-------------
Net unrealized
appreciation: $ 318,303,155
-------------
-------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 144
<PAGE>
G.T. GLOBAL TELECOMMUNICATIONS FUND
FORWARD FOREIGN CURRENCY CONTRACTS OUTSTANDING
OCTOBER 31, 1994
<TABLE>
<CAPTION>
Contract Delivery Unrealized
Total Contracts to Sell: Market Value Price Date Appreciation
- ------------------------------------------------------------------------------- -------------- --------- --------- ------------
<S> <C> <C> <C> <C>
Deutschemark................................................................... $ 99,175,934 1.4893 01/25/95 $ 824,066
Deutschemark................................................................... 69,353,233 1.4878 01/25/95 646,767
Deutschemark................................................................... 69,377,705 1.4884 01/25/95 622,295
Deutschemark................................................................... 99,112,339 1.4884 01/25/95 887,661
Deutschemark................................................................... 49,670,352 1.4917 01/31/95 329,648
Deutschemark................................................................... 39,715,637 1.4909 01/31/95 284,363
Deutschemark................................................................... 49,633,058 1.4906 01/31/95 366,942
Deutschemark................................................................... 99,270,112 1.4906 01/31/95 729,888
Deutschemark................................................................... 99,272,775 1.4907 01/31/95 727,225
-------------- ------------
Total Contracts to Sell (Receivable amount $680,000,000)................... $ 674,581,145 $5,418,855
-------------- ------------
-------------- ------------
<FN>
- ----------------
See Note 1 of the financial statements.
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
WRITTEN OPTION CONTRACT OUTSTANDING
OCTOBER 31, 1994
<TABLE>
<CAPTION>
Expiration
Strike Date Shares Currency
--------- ----------- ------------- -----------
<S> <C> <C> <C> <C>
JPY Call/USD Put (cost $8,430,000).................................... 92.92 10/09/95 300,000,000 USD
<CAPTION>
Market Value
-------------
<S> <C>
JPY Call/USD Put (cost $8,430,000).................................... $ 10,680,000
-------------
-------------
<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)
------------------------------------------------------------------------------------
Rights &
Equity Warrants Structured Note Short-Term Other Total
----------- ------------- --------------- --------------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
Argentina............... 0.8 0.8
Australia............... 1.0 1.0
Brazil.................. 3.0 3.0
Canada.................. 1.4 1.4
Chile................... 1.5 1.5
Denmark................. 2.0 2.0
Finland................. 4.3 4.3
France.................. 3.2 3.2
Germany................. 1.4 1.4
Hong Kong............... 1.5 1.5
Indonesia............... 0.5 0.5
Israel.................. 1.2 1.2
Italy................... 4.4 4.4
Japan................... 11.2 11.2
Malaysia................ 1.4 1.4
Mexico.................. 4.8 4.8
Netherlands............. 1.0 1.0
New Zealand............. 1.2 1.2
Pakistan................ 0.8 0.8
Peru.................... 0.6 0.6
Philippines............. 1.2 1.2
Portgual................ 0.2 0.2
Russia.................. 0.3 0.3
Singapore............... 0.9 0.9
Spain................... 1.9 1.9
Sweden.................. 0.8 0.8
Thailand................ 4.9 0.3 5.2
Turkey.................. 0.2 0.2
UK...................... 5.7 5.7
U.S..................... 30.7 0.4 2.9 2.4 36.4
-- -- -- --
--- ---------
Total................... 94.0 0.3 0.4 2.9 2.4 100.0
-- -- -- --
-- -- -- --
--- ---------
--- ---------
<FN>
- ----------------
(a) Percentages indicated are based on net assets of $2,828,482,921.
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 145
<PAGE>
G.T. GLOBAL TELECOMMUNICATIONS FUND
STATEMENT OF ASSETS
AND LIABILITIES
October 31, 1994
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Assets:
Investments in securities, at value (cost $2,445,823,573) (Note 1)................................. $2,765,046,501
U.S. currency.........................................................................
$ 51
Foreign currency (cost $20,379,987)...................................................
20,663,779 20,663,830
-----------
Receivable for securities sold..................................................................... 48,191,408
Receivable for Fund shares sold.................................................................... 16,089,479
Receivable for forward foreign currency contracts -- open (Note 1)................................. 5,418,855
Dividends and dividend withholding tax reclaims receivable......................................... 4,657,844
Interest receivable................................................................................ 1,224,874
Unamortized deferred organizational expenses (Note 1).............................................. 29,824
Cash held as collateral for securities loaned (Note 1)............................................. 254,665,344
--------------
Total assets....................................................................................... 3,115,987,959
--------------
Liabilities:
Payable for Fund shares repurchased................................................................ 12,184,690
Premium on options (cost $8,430,000)............................................................... 10,680,000
Payable for securities purchased................................................................... 5,055,414
Payable for investment management and administration fees (Note 2)................................. 2,129,685
Payable for service and distribution expenses (Note 2)............................................. 1,648,382
Payable for transfer agent fees (Note 2)........................................................... 495,238
Payable for registration fees...................................................................... 349,413
Payable for custodian fees (Note 1)................................................................ 203,991
Payable for professional fees...................................................................... 88,191
Payable for Directors' fees (Note 2)............................................................... 2,850
Accrued expenses................................................................................... 1,840
Collateral for securities loaned (Note 1).......................................................... 254,665,344
--------------
Total liabilities.................................................................................. 287,505,038
--------------
Net assets........................................................................................... $2,828,482,921
--------------
--------------
Class A:
Net asset value and redemption price per share
($1,644,401,968 DIVIDED BY 92,389,577 shares outstanding).......................................... $ 17.80
--------------
--------------
Maximum offering price per share
(100/95.25 of $17.80)*.............................................................................. $ 18.69
--------------
--------------
Class B:+
Net asset value and offering price per share
($1,184,080,953 DIVIDED BY 67,062,045 shares outstanding).......................................... $ 17.66
--------------
--------------
Net assets consist of:
Paid in capital (Note 4)........................................................................... $2,369,842,398
Accumulated net realized gain on investments, foreign currency conversions, forward foreign
currency contracts and options.................................................................... 135,486,335
Net unrealized appreciation of investments, written options, dividends and dividend withholding tax
reclaims receivable, interest receivable, securities purchased and sold, foreign currency
conversions and forward foreign currency contracts................................................ 323,154,188
--------------
Total -- representing net assets applicable to capital shares outstanding.......................... $2,828,482,921
--------------
--------------
<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 146
<PAGE>
G.T. GLOBAL TELECOMMUNICATIONS 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 $3,156,142)....................................... $ 27,209,488
Interest income (net of foreign withholding tax of $29).............................................. 14,716,746
-------------
Total investment income.............................................................................. 41,926,234
-------------
Expenses:
Investment management and administration fees (Note 2)............................................... 21,926,187
Service and distribution expenses: (Note 2)
Class A............................................................................. $ 7,330,230
Class B............................................................................. 8,894,192 16,224,422
-------------
Transfer agent fees (Note 2)......................................................................... 5,870,772
Custodian fees (Note 1).............................................................................. 1,598,727
Registration fees.................................................................................... 830,617
Professional fees.................................................................................... 219,319
Printing and postage expenses........................................................................ 188,403
Amortization of organizational expenses (Note 1)..................................................... 17,701
Directors' fees (Note 2)............................................................................. 7,494
Other................................................................................................ 50,872
-------------
Total expenses....................................................................................... 46,934,514
-------------
Net investment loss.................................................................................... (5,008,280)
-------------
Net realized and unrealized gain (loss) on investments and foreign currencies (Note 1):
Net realized gain on investments and written options.................................. 171,447,523
Net realized loss on foreign currency conversions and forward foreign currency
contracts............................................................................ (33,457,459)
-------------
Net realized gain.................................................................................... 137,990,064
-------------
Change in unrealized appreciation of dividends and dividend withholding tax reclaims
receivable, interest receivable, securities purchased and sold, foreign currency
conversions and forward foreign currency contracts................................... 3,578,825
Change in unrealized appreciation of investments...................................... 27,259,645
-------------
Net unrealized appreciation.......................................................................... 30,838,470
-------------
Net realized and unrealized gain on investments, options and foreign currencies........................ 168,828,534
-------------
Net increase in net assets resulting from operations................................................... $ 163,820,254
-------------
-------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 147
<PAGE>
G.T. GLOBAL TELECOMMUNICATIONS 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)...............................................................
$ (5,008,280) $ 4,947,873
Net realized gain on investments, written options, foreign currency conversions and forward
foreign currency contracts................................................................
137,990,064 35,389,185
Change in unrealized appreciation of investments, written options, dividends and dividend
withholding tax reclaims receivable, interest receivable, securities purchased and sold,
foreign currency conversions and forward foreign currency contracts.......................
30,838,470 300,873,503
---------------- ----------------
Net increase in net asssets resulting from operations......................................
163,820,254 341,210,561
Class A:+
Distributions to shareholders from: (Note 1)
Net investment income......................................................................
(1,139,864) (6,107,928)
Net realized gain from investments.........................................................
(20,482,527) 0
Class B:++
Distributions to shareholders from: (Note 1)
Net investment income......................................................................
(511,428) 0
Net realized gain from investments.........................................................
(9,209,255) 0
Capital share transactions: (Note 4)
Increase from capital shares sold and reinvested...........................................
1,678,630,071 1,077,285,253
Decrease from capital shares repurchased...................................................
(661,298,601) (176,576,036)
---------------- ----------------
Net increase from capital share transactions...............................................
1,017,331,470 900,709,217
---------------- ----------------
Total increase in net assets.................................................................
1,149,808,650 1,235,811,850
Net assets:
Beginning of year..........................................................................
1,678,674,271 442,862,421
---------------- ----------------
End of year................................................................................
$2,828,482,921* $1,678,674,271**
----------------
---------------- ----------------
----------------
<FN>
- ----------------
* Including undistributed net investment income of $0.
** Including undistributed net investment income of $4,224,140.
+ All capital shares issued and outstanding 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 148
<PAGE>
G.T. GLOBAL TELECOMMUNICATIONS 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+
--------------------------------------------
JANUARY 27, 1992 CLASS B++
(COMMENCEMENT ------------------------------
YEAR ENDED OCTOBER 31, OF OPERATIONS) YEAR ENDED
------------------------- TO OCTOBER 31, APRIL 1, 1993 TO
1994(C) 1993 OCTOBER 31, 1992 1994(C) OCTOBER 31, 1993
----------- ----------- ---------------- ----------- ----------------
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of year................. $ 16.92 $ 11.16 $ 11.43 $ 16.87 $ 12.68
----------- ----------- ---------------- ----------- ----------------
Income from investment operations:
Net investment income............................ (0.01) 0.08 0.14* (0.10) 0.01
Net realized and unrealized gain (loss) on
investments..................................... 1.17 5.83 (0.41) 1.17 4.18
----------- ----------- ---------------- ----------- ----------------
Net increase (decrease) from investment
operations...................................... 1.16 5.91 (0.27) 1.07 4.19
----------- ----------- ---------------- ----------- ----------------
Distributions:
Net investment income............................ (0.01) (0.15) (0.00) (0.01) (0.00)
Net realized gain on investments................. (0.27) (0.00) (0.00) (0.27) (0.00)
----------- ----------- ---------------- ----------- ----------------
Total distributions.............................. (0.28) (0.15) (0.00) (0.28) (0.00)
----------- ----------- ---------------- ----------- ----------------
Net asset value, end of year....................... $ 17.80 $ 16.92 $ 11.16 $ 17.66 $ 16.87
----------- ----------- ---------------- ----------- ----------------
----------- ----------- ---------------- ----------- ----------------
Total investment return(d)......................... 7.02% 53.6% 2.4%(a) 6.50% 33.0%(a)
Ratios and supplemental data:
Net assets, end of year (in 000's)................. $ 1,644,402 $ 1,223,340 $442,862 $ 1,184,081 $455,335
Ratio of net investment income to average net
assets............................................ (0.02)% 0.8% 2.1 %*(b (0.52)% 0.3%(b)
Ratio of expenses to average net asset............. 1.80% 2.0% 2.3 %*(b 2.30% 2.5%(b)
Portfolio turnover rate+++......................... 57% 41% 4%(b) 57% 41%
<FN>
- ----------------
+ All capital shares issued and outstanding 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 less than $0.01. Without such reimbursement, the annualized
expense ratio would have been 2.30% and the annualized ratio of net
investment income average net assets would have been 2.04% (See Note 2).
(a) Not annualized.
(b) Annualized.
(c) These selected per share data were calculated based upon weighted average
shares outstanding during the period.
(d) Total investment return does not include sales charges.
</TABLE>
Statement of Additional Information Page 149
<PAGE>
G.T. GLOBAL TELECOMMUNICATIONS FUND
NOTES TO
FINANCIAL STATEMENTS
October 31, 1994
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
G.T. Global Telecommunications 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 quoted sales 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 of the Fund are maintained in U.S. dollars. The market
values of foreign securities, currency holdings, other assets and liabilities
are recorded in the books and records of the Fund after translation to U.S.
dollars based on the exchange rates on that day. The cost of each security is
determined using historical exchange rates. Income and withholding taxes are
translated at prevailing exchange rates when 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 or 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.
In addition, the Fund may focus its investments in certain related
telecommunication industries, subjecting the Fund to greater risk than a fund
that is more diversified.
(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,
Statement of Additional Information Page 150
<PAGE>
G.T. GLOBAL TELECOMMUNICATIONS FUND
including accrued interest, is at least equal to the amount to be repaid to the
Fund under each agreement at its maturity.
(D) FORWARD FOREIGN CURRENCY CONTRACTS
A forward foreign currency contract ("Forward") 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 set aside cash, U.S. government securities or other liquid, high grade
debt securities in an amount not less than the exercise price or otherwise
provide adequate cover at all times while the put option is outstanding.
The premium paid by the Fund for the purchase of a call or put option is
included in the Fund's "Statement of Assets and Liabilities" as an investment
and subsequently "marked-to-market" to reflect the current market value of the
option. If an option which the Fund has purchased expires on the stipulated
expiration date, the Fund realizes a loss in the amount of the cost of the
option. If the Fund enters into a closing sale transaction, the Fund realizes a
gain or loss, depending on whether proceeds from the closing sale transaction
are greater or less than the cost of the option. If the Fund exercises a call
option, the cost of the securities acquired by exercising the call is increased
by the premium paid to buy the call. If the Fund exercises a put option, it
realizes a gain or loss from the sale of the underlying security, and the
proceeds from such sale are decreased by the premium originally paid.
The risk associated with purchasing options is limited to the premium originally
paid. The risk in writing a call option is that the Fund may forego the
opportunity of profit if the market value of the underlying security or index
increases and the option is exercised. The risk in writing a put option is that
the Fund may incur a loss if the market value of the underlying security or
index decreases and the option is exercised. In addition, there is the risk the
Fund may not be able to enter into a closing transaction because of an illiquid
secondary market.
(F) 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.
(G) PORTFOLIO SECURITIES LOANED
At October 31, 1994, stocks with an aggregate value of approximately
$220,840,237, were on loan to brokers. The loans were secured by cash collateral
of $254,665,344. 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 the loan. For
the year ended October 31, 1994, the Fund received $910,464 of income from
securities lending which was used to offset the Fund's custody expenses.
Statement of Additional Information Page 151
<PAGE>
G.T. GLOBAL TELECOMMUNICATIONS FUND
(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 $78,843. These expenses
are being amortized on a straightline 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. As of November 1, 1993, the cumulative
effect of such differences totaling $882,609 was reclassified from undistributed
net investment income to accumulated net realized gains on investments and
options. Net investment loss, net realized gain on investments, foreign currency
conversions and forward foreign currency contracts 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.
(N) RESTRICTED SECURITIES
The Fund is permitted to invest in privately placed restricted securities. These
securities may be resold in transactions exempt from registration or to the
public if the securities are registered. Disposal of these securities may
involve time-consuming negotiations and expense, and prompt sale at an
acceptable price may be difficult. At the end of the period, restricted
securities (excluding 144A issues) are shown at the end of the Fund's Portfolio
of Investments.
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
$2,477,493 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 were first made available on April 1, 1993. Class B shares are
not subject to initial sales charges. When Class B shares are sold, G.T. Global
Statement of Additional Information Page 152
<PAGE>
G.T. GLOBAL TELECOMMUNICATIONS FUND
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 $1,731,244. 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
expense) 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.
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 $2,543,023,904 and $1,513,013,543, respectively. There
were no purchases or sales of U.S. government obligations by the Fund for the
year ended October 31, 1994.
Statement of Additional Information Page 153
<PAGE>
G.T. GLOBAL TELECOMMUNICATIONS 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, 400,000,000 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; 200,000,000 were classified as shares of G.T. Global
Emerging Markets 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
-------------------------- --------------------------
CLASS A SHARES AMOUNT SHARES AMOUNT
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Shares sold............................................................... 49,183,489 $ 833,820,941 43,772,780 $ 640,295,982
Shares issued in connection with reinvestment of distributions............ 1,050,827 17,160,181 338,520 3,892,995
----------- ------------- ----------- -------------
50,234,316 850,981,122 44,111,300 644,188,977
Shares repurchased........................................................ (30,135,506) (509,780,043) (11,493,152) (164,060,126)
----------- ------------- ----------- -------------
Net increase.............................................................. 20,098,810 $ 341,201,079 32,618,148 $ 480,128,851
----------- ------------- ----------- -------------
----------- ------------- ----------- -------------
<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............................................................... 48,594,410 $ 819,697,227 27,770,391 $ 433,096,276
Shares issued in connection with reinvestment of distributions............ 488,736 7,951,722 0 0
----------- ------------- ----------- -------------
49,083,146 827,648,949 27,770,391 433,096,276
Shares repurchased........................................................ (9,006,454) (151,518,558) (785,039) (12,515,910)
----------- ------------- ----------- -------------
Net increase.............................................................. 40,076,692 $ 676,130,391 26,985,352 $ 420,580,366
----------- ------------- ----------- -------------
----------- ------------- ----------- -------------
</TABLE>
5. WRITTEN OPTIONS
The Fund's written options contracts activity for the year ended October 31,
1994, was as follows:
<TABLE>
<CAPTION>
SHARES PREMIUMS
----------- ----------
<S> <C> <C>
Options outstanding at October 31, 1993................................................................... 0 $ 0
Options written........................................................................................... 300,000,000 8,430,000
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................................................................... 300,000,000 $8,430,000
----------- ----------
----------- ----------
</TABLE>
- --------------
FEDERAL TAX INFORMATION:
For Federal income tax purposes, the Fund had distributions from long-term
capital gains of $22,547,390.
Statement of Additional Information Page 154
<PAGE>
G.T. GLOBAL CONSUMER PRODUCTS AND SERVICES FUND
REPORT OF
INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
To the Board of Directors of
G.T. Investment Funds, Inc. and the
Shareholders of G.T. Investment Funds, Inc.:
G.T. Global Consumer Products and Services Fund
We have audited the accompanying statement of assets and liabilities of G.T.
Investment Funds, Inc. (G.T. Global Consumer Products and Services Fund) as of
December 20, 1994. The financial statement is the responsibility of the Fund's
management. Our responsibility is to express an opinion on the financial
statement based on our audit.
We conducted our audit 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 statement is free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statement. Our procedures included
confirmation of cash held by the custodian as of December 20, 1994. 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 audit provides a reasonable basis for our
opinion.
In our opinion, the statement of assets and liabilities referred to above
present fairly, in all material respects, the financial position of G.T.
Investment Funds, Inc.: (G.T. Global Consumer Products and Services Fund) as of
December 20, 1994, in conformity with generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
BOSTON, MASSACHUSETTS
DECEMBER 20, 1994
Statement of Additional Information Page 155
<PAGE>
G.T. GLOBAL CONSUMER PRODUCTS AND SERVICES FUND
STATEMENT OF ASSETS
AND LIABILITIES
December 20, 1994
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
G.T. GLOBAL
CONSUMER PRODUCTS
AND SERVICES FUND
-------------------
<S> <C>
Assets:
Investment in Portfolio...................................................................................... $ 100,000
Unamortized deferred organization expenses (Note 2).......................................................... 51,500
----------
Total assets............................................................................................... 151,500
----------
Liabilities:
Payable for deferred organization expenses (Note 2).......................................................... 51,500
----------
Total liabilities.......................................................................................... 51,500
----------
Commitments (Note 2 and 3)
NET ASSETS, applicable to 4,374.453 shares of Class A common stock at
$0.0001 par value, and 4,374.453 shares of Class B common stock at
$0.0001 par value, issued and outstanding (Note 1)........................................................... $ 100,000
----------
----------
CLASS A:
NET ASSET VALUE AND REDEMPTION PRICE PER SHARE................................................................. $ 11.43
----------
----------
MAXIMUM OFFERING PRICE PER SHARE (100/95.25 of $11.43)
reduced on sales of $50,000 or more and in certain other circumstances --
see "How to Invest" and "How to Make Exchanges".............................................................. $ 12.00
----------
----------
CLASS B:+
NET ASSET VALUE AND OFFERING PRICE PER SHARE................................................................... $ 11.43
----------
----------
<FN>
- ----------------
+ 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 156
<PAGE>
G.T. GLOBAL CONSUMER PRODUCTS AND SERVICES FUND
NOTES TO STATEMENT OF
ASSETS AND LIABILITIES
December 20, 1994
- --------------------------------------------------------------------------------
NOTE 1
G.T. Global Consumer Products and Services 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"). The Fund is classified as a diversified, open-end
management investment company. The Company has 6 billion shares of common stock
authorized at par value $0.0001. Of this amount, 200 million shares have been
classified as shares of the Fund; 100 million shares of the Fund have been
classified as Class A shares and 100 million shares of the Fund have been
classified as Class B shares.
The Fund invests substantially all its investable assets in its corresponding
Portfolio (Global Consumer Products and Services Portfolio), which is registered
as an open-end management investment company under the 1940 Act and has an
investment objective, policies and limitations substantially identical to those
of the Fund.
NOTE 2
Costs incurred by the Fund in connection with its organization, estimated at
$51,500, will be deferred and amortized on a straight-line basis for a five-year
period beginning at the commencement of the Fund's operations. G.T. Capital has
advanced certain of the Fund's organization costs incurred to date and the Fund
will reimburse G.T. Capital for the amount of these advances. In the event that
G.T. Capital redeems any of the initial 4,374.906 Class A or 4,374.906 Class B
shares of the Fund within the five-year amortization period, the Fund's
unamortized organization expenses allocable to the shares redeemed will be
deducted from G.T. Capital's redemption proceeds.
NOTE 3
G.T. Capital serves as the administrator of the Fund. The Fund pays G.T. Capital
administration fees, calculated daily and paid monthly, at an annualized rate of
0.25% of the Fund's average daily net assets. In addition, the Fund bears its
pro rata portion of the investment management and administration fees paid by
its corresponding Portfolio to G.T. Capital. The Portfolio pays such fees, based
on the average daily net assets of the Portfolio, at the annualized rate of
0.725% on the first $500 million, 0.70% on the next $500 million, 0.675% on he
next $500 million, and 0.65% on amounts in excess of $2.5 billion.
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 Class A shares,
and reallows a portion of such charges to dealers through which the sales are
made. 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. 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 each class' respective 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.
Statement of Additional Information Page 157
<PAGE>
G.T. GLOBAL CONSUMER PRODUCTS AND SERVICES FUND
Under 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.
Statement of Additional Information Page 158
<PAGE>
G.T. GLOBAL CONSUMER PRODUCTS AND SERVICES FUND
STATEMENT OF ASSETS
AND LIABILITIES
April 30, 1995 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Assets:
<S> <C>
Investments in Global Consumer Products and Services Portfolio (cost $1,933,316) (Note 1)..............
$1,954,472
Receivable for expense reimbursement (Note 2)..........................................................
170,013
Unamortized organizational expenses (Note 1)...........................................................
48,085
Receivable for Fund shares sold........................................................................
30,012
----------
Total assets...........................................................................................
2,202,582
----------
Liabilities:
Payable for deferred organizational expenses (Note 1)..................................................
42,323
Payable for printing and postage expenses..............................................................
18,000
Payable for registration fees..........................................................................
9,185
Payable for professional fees..........................................................................
7,845
Payable for administration fees (Note 2)...............................................................
1,173
Payable for transfer agent fees (Note 2)...............................................................
1,167
Payable for service and distribution expenses (Note 2).................................................
971
Payable for fund accounting fees.......................................................................
94
Accrued expenses.......................................................................................
595
----------
Total liabilities......................................................................................
81,353
----------
Net assets...............................................................................................
$2,121,229
----------
----------
Class A:
Net asset value and redemption price per share
($1,615,464 DIVIDED BY 138,685 shares outstanding).....................................................
$ 11.65
----------
----------
Maximum offering price per share
(100/95.25 of $11.65)*..................................................................................
$ 12.23
----------
----------
Class B:+
Net asset value and redemption price per share
($505,765 DIVIDED BY 43,472 shares outstanding)........................................................
$ 11.63
----------
----------
Net assets consist of:
Paid in capital (Note 3)...............................................................................
$2,094,817
Undistributed net investment income....................................................................
12,183
Accumulated net realized loss on investments and foreign currency transactions -- Global Consumer
Products and Services Portfolio.......................................................................
(6,927)
Net unrealized depreciation on translation of assets and liabilities in foreign currencies -- Global
Consumer Products and Services Portfolio..............................................................
(191)
Net unrealized appreciation of investments -- Global Consumer Products and Services Portfolio..........
21,347
----------
Total -- representing net assets applicable to capital shares outstanding..............................
$2,121,229
----------
----------
- ----------------
<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 159
<PAGE>
G.T. GLOBAL CONSUMER PRODUCTS AND SERVICES FUND
STATEMENT OF OPERATIONS
December 30, 1994 (commencement of operations) to April 30, 1995
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Investment income:
Interest income -- Global Consumer Products and Services Portfolio....................................... $ 16,808
Dividend income -- Global Consumer Products and Services Portfolio....................................... 7,024
---------
Total investment income.................................................................................. 23,832
---------
Expenses:
Expenses -- Global Consumer Products and Services Portfolio.............................................. 24,076
Registration fees........................................................................................ 97,000
Legal fees............................................................................................... 19,200
Printing and postage expenses............................................................................ 18,000
Audit fees............................................................................................... 8,400
Directors' fees and expenses (Note 2).................................................................... 3,600
Amortization of organizational expenses (Note 1)......................................................... 3,415
Transfer agent fees (Note 2)............................................................................. 2,767
Service and distribution expenses (Note 2):
Class A..................................................................................... $ 1,953
Class B..................................................................................... 784 2,737
---------
Administration fees (Note 2)............................................................................. 1,173
Fund accounting fees..................................................................................... 94
Other.................................................................................................... 1,200
---------
Total expenses before expense reimbursement.............................................................. 181,662
Less expense reimbursement (Note 2).................................................................... (170,013)
---------
Total net expenses....................................................................................... 11,649
---------
Net investment income...................................................................................... 12,183
---------
Net realized and unrealized gain (loss) on investments and foreign currencies:
Net realized loss on investments -- Global Consumer Products and Services Portfolio........... (3,890)
Net realized loss on foreign currency transactions -- Global Consumer Products and Services
Portfolio.................................................................................... (3,037)
---------
Net realized loss during the period.................................................................... (6,927)
Net change in unrealized depreciation on translation of assets and liabilities in foreign
currencies -- Global Consumer Products and Services Portfolio................................ (191)
Net change in unrealized appreciation of investments -- Global Consumer Products and Services
Portfolio.................................................................................... 21,347
---------
Net unrealized appreciation during the period.......................................................... 21,156
---------
Net realized and unrealized gain on investments and foreign currencies -- Global Consumer Products
and Services Portfolio.................................................................................... 14,229
---------
Net increase in net assets resulting from operations....................................................... $ 26,412
---------
---------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 160
<PAGE>
G.T. GLOBAL CONSUMER PRODUCTS AND SERVICES FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DECEMBER 30, 1994
(COMMENCEMENT OF OPERATIONS)
TO APRIL 30, 1995
(UNAUDITED)
-----------------------------
<S> <C>
Increase in net assets
Operations:
Net investment income..............................................................................
$ 12,183
Net realized loss on investments and foreign currency transactions -- Global Consumer Products and
Services Portfolio................................................................................
(6,927)
Net change in unrealized depreciation on translation of assets and liabilites in foreign currencies
-- Global Consumer Products and Services Portfolio................................................
(191)
Net change in unrealized appreciation of investments -- Global Consumer Products and Services
Portfolio.........................................................................................
21,347
-----------
Net increase in net assets resulting from operations...............................................
26,412
Capital share transactions (Note 3):
Increase from shares sold..........................................................................
2,028,535
Decrease from shares repurchased...................................................................
(33,718)
-----------
Net increase from capital share transactions.......................................................
1,994,817
-----------
Total increase in net assets.........................................................................
2,021,229
Net assets:
Beginning of period................................................................................
100,000
-----------
End of period......................................................................................
$ 2,121,229
-----------
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 161
<PAGE>
G.T. GLOBAL CONSUMER PRODUCTS AND SERVICES 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
DECEMBER 30, 1994 DECEMBER 30, 1994
(COMMENCEMENT OF OPERATIONS) (COMMENCEMENT OF OPERATIONS)
TO APRIL 30, 1995 TO APRIL 30, 1995
(UNAUDITED)* (UNAUDITED)*
---------------------------- ----------------------------
<S> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period................................. $ 11.43 $ 11.43
------- -------
Income from investment operations:
Net investment income.............................................. 0.10 0.08
Net realized and unrealized gain on investments.................... 0.12 0.12
------- -------
Net increase in net asset value from investment operations........... 0.22 0.20
------- -------
Net asset value, end of period....................................... $ 11.65 $ 11.63
------- -------
------- -------
Total investment return (c).......................................... 1.92%(b) 1.75%(b)
Ratios and supplemental data:
Net assets, end of period (in 000's)................................. $ 1,615 $ 506
Ratio of net investment income to average net assets:
With reimbursement by G.T. Capital Management, Inc............... 2.66%(a) 2.16%(a)
Without reimbursement by G.T. Capital Management, Inc............ (33.87)%(a) (34.37)%(a)
Ratio of expenses to average net assets:
With reimbursement by G.T. Capital Management, Inc............... 2.40%(a) 2.90%(a)
Without reimbursement by G.T. Capital Management, Inc............ 38.93%(a) 39.43%(a)
- ----------------
<FN>
(a) Annualized.
(b) Not annualized.
(c) Total investment return does not include sales charges.
* These selected per share data were calculated based upon weighted average
shares outstanding during the period.
</TABLE>
Statement of Additional Information Page 162
<PAGE>
G.T. GLOBAL CONSUMER PRODUCTS AND SERVICES FUND
NOTES TO
FINANCIAL STATEMENTS
April 30, 1995 (Unaudited)
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
G.T. Global Consumer Products and Services 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 twelve series of shares in operation, each series corresponding
to a distinct portfolio of investments. The Fund invests substantially all of
its investable assets in Global Consumer Products and Services Portfolio
("Portfolio"), which is registered as an open-end management investment company
under the 1940 Act and has investment objectives, policies and limitations
substantially identical to those of the Fund. The value of the Fund's investment
in the Portfolio reflects the Fund's proportionate interest in the net assets of
the Portfolio. The financial statements of the Portfolio, including the
Portfolio of Investments, are included elsewhere in this Report and should be
read in conjunction with the Fund's financial statements.
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) INVESTMENT VALUATION
Valuation of securities and other investment practices by the Portfolio are
discussed in Note 1 of the Portfolio's Notes to Financial Statements which are
included elsewhere in this Report.
(B) 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.
(C) 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 Portfolio and timing differences.
(D) 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 $51,500. These expenses
are being amortized on a straightline basis over a five-year period.
2. RELATED PARTIES
G.T. Capital Management, Inc. ("G.T. Capital") is the Fund's administrator. The
Fund pays administration fees to G.T. Capital at the annualized rate of 0.25% of
the Fund's average daily net assets. 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 items) 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 period ended April 30, 1995, G.T. Global retained $897
of such sales charges. G.T. Global also makes ongoing shareholder servicing and
trail commission payments to dealers whose clients hold Class A shares.
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 163
<PAGE>
G.T. GLOBAL CONSUMER PRODUCTS AND SERVICES FUND
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 period ended April 30,
1995, G.T. Global collected CDSCs in the amount of $80. 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 plans of distribution 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 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.
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 164
<PAGE>
G.T. GLOBAL CONSUMER PRODUCTS AND SERVICES FUND
3. CAPITAL SHARES
At April 30, 1995, 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 Emerging
Markets 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 Strategic Income
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 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 Financial Services Fund;
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>
DECEMBER 30, 1994
(COMMENCEMENT OF
OPERATIONS)
TO APRIL 30, 1995
(UNAUDITED)
---------------------
CLASS A SHARES AMOUNT
- ---------------------------------------------------------------------------------------------------- --------- ----------
<S> <C> <C>
Shares sold......................................................................................... 135,068 $1,553,003
Shares repurchased.................................................................................. (757) (8,798)
--------- ----------
Net increase........................................................................................ 134,311 $1,544,205
--------- ----------
--------- ----------
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 30, 1994
(COMMENCEMENT OF
OPERATIONS)
TO APRIL 30, 1995
(UNAUDITED)
--------------------
CLASS B SHARES AMOUNT
- ------------------------------------------------------------------------------------------------------ --------- ---------
<S> <C> <C>
Shares sold........................................................................................... 41,247 $ 475,532
Shares repurchased.................................................................................... (2,149) (24,920)
--------- ---------
Net increase.......................................................................................... 39,098 $ 450,612
--------- ---------
--------- ---------
</TABLE>
4. SUBSEQUENT EVENT
On June 1, 1995, the Fund, along with the other series of G.T. Investment Funds,
Inc., commenced offering a new class of shares, the "Advisor Class" shares.
These shares are available subject to certain terms and conditions to employee
benefit plans; to investor accounts managed or advised by financial planners,
bank trust departments, or under a "wrap fee" program; and to other accounts
advised by companies affiliated with the G.T. Group. With respect to the
issuance of "Advisor Class" shares, 100,000,000 shares were classified as shares
of each of the fourteen series of the Company and designated as "Advisor Class"
common stock. 1,400,000,000 shares remain unclassified.
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 165
<PAGE>
GLOBAL CONSUMER PRODUCTS AND SERVICES PORTFOLIO
PORTFOLIO OF INVESTMENTS
April 30, 1995 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
% of Net
Market Assets
Equity Investments Country Shares Value (DELTA)
- ---------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Consumer Non-Durables
(22.8%)
Philip Morris Cos.,
Inc...................... US 1,675 $ 113,481 5.8
TOBACCO
Amway Asia Pacific Ltd.... HK 2,700 96,863 5.0
HOUSEHOLD PRODUCTS
RJR Nabisco Holdings
Corp..................... US 2,980 81,578 4.2
TOBACCO
Procter & Gamble Co....... US 1,100 76,863 3.9
HOUSEHOLD PRODUCTS
Mattel, Inc............... US 3,200 76,000 3.9
TOYS
------------
444,785
------------
Retailers (16.5%)
American Stores Co........ US 3,400 87,122 4.4
RETAILERS-FOOD
Tandy Corp................ US 1,700 84,150 4.3
RETAILERS-OTHER
AnnTaylor Stores,
Inc.(CHECK MARK)......... US 3,100 77,888 4.0
RETAILERS-APPAREL
REX Stores Corp.(CHECK
MARK).................... US 5,500 74,938 3.8
RETAILERS-OTHER
------------
324,098
------------
Services (14.9%)
Sbarro, Inc............... US 3,000 77,250 3.9
RESTAURANTS
Heritage Media Corp.
'A'(CHECK MARK).......... US 3,000 76,810 3.9
BROADCASTING &
PUBLISHING
La Quinta Inns, Inc....... US 2,400 71,700 3.7
LODGING
ServiceMaster L.P......... US 2,700 65,568 3.4
CONSUMER SERVICES
------------
291,328
------------
Consumer Durables (13.3%)
Singer Co. N.V............ HK 3,800 96,425 4.9
APPLIANCES & HOUSEHOLD
Three-Five Systems,
Inc.(CHECK MARK)......... US 3,500 84,875 4.4
CONSUMER ELECTRONICS
Nokia AB 'K'.............. FIN 1,900 78,024 4.0
CONSUMER ELECTRONICS
------------
259,324
------------
Beverages - Alcoholic (7.4%)
John Labatt Ltd........... CAN 4,700 78,247 4.0
Noble China(CHECK MARK)... CAN 21,000 67,219 3.4
------------
145,466
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 166
<PAGE>
GLOBAL CONSUMER PRODUCTS AND SERVICES PORTFOLIO
<TABLE>
<CAPTION>
% of Net
Market Assets
Equity Investments Country Shares Value (DELTA)
- ---------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Textiles & Apparel (4.3%)
Yue Yuen Industrial
Holdings................. HK 360,000 $ 83,250 4.3
------------
Finance (3.9%)
McArthur Glen Realty
Corp..................... US 5,700 75,525 3.9
REAL ESTATE INVESTMENT
TRUST
------------ -----
Total Equity Investments
(cost $1,603,925).......... 1,623,776 83.1
------------ -----
------------ -----
<CAPTION>
% of Net
Principal Market Assets
Short-Term Investments Currency Amount Value (DELTA)
- ---------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Repurchase Agreements
(19.2%)
United States (19.2%)
Dated April 28, 1995
with State Street Bank
& Trust Company, due
May 1, 1995, for an
effective yield of
5.89%, collateralized
by $390,000 Federal
Home Loan Bank, 6.06%
due 4/16/98 (market
value of collateral is
$381,113, including
accrued interest) (cost
$376,185).............. 376,185 19.2
------------
Treasury Bills (4.0%)
Mexico (4.0%)
Mexican Tesobonos,
effective yield 16.77%,
due 7/27/95 (cost
$77,142)............... USD 82,000 78,638 4.0
------------ -----
Total Short-Term Investments
(cost $453,327)............ 454,823 23.2
------------ -----
Total Investments (cost
$2,057,252)*............... 2,078,599 106.3
Other Assets and
Liabilities................ (124,027) (6.3)
------------ -----
Net Assets.................. $ 1,954,572 100.0
------------ -----
------------ -----
<FN>
-----------------
(DELTA) Percentages indicated are based on net assets of $1,954,572.
(CHECK Non-income producing security.
MARK)
* For Federal income tax purposes, cost is $2,057,252 and
appreciation (depreciation) is as follows:
Unrealized appreciation: $ 73,276
Unrealized depreciation: (51,929)
-------------
Net unrealized appreciation: $ 21,347
-------------
-------------
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
The Fund's Portfolio of Investments at April 30, 1995 was concentrated in the
following countries:
<TABLE>
<CAPTION>
Percentage of Net Assets (DELTA)
----------------------------------
Country (Country Code/ Currency Code) Equity Short-Term Other Total
- -------------------------------------- ------ ---------- ----- -----
<S> <C> <C> <C> <C>
Canada (CAN/CAD)...................... 7.4 7.4
Finland (FIN/FIM)..................... 4.0 4.0
Hong Kong (HK/HKD).................... 14.2 14.2
Mexico (MEX/MXN)...................... 4.0 4.0
United States (US/USD)................ 57.5 19.2 (6.3 ) 70.4
------ --- ----- -----
Total................................. 83.1 23.2 (6.3 ) 100
------ --- ----- -----
------ --- ----- -----
<FN>
- ----------------
(DELTA) Percentages indicated are based on net assets of $1,954,572.
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 167
<PAGE>
GLOBAL CONSUMER PRODUCTS AND SERVICES PORTFOLIO
STATEMENT OF ASSETS
AND LIABILITIES
April 30, 1995 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Assets:
Investments in securities, at value (cost $1,681,067) (Note 1)............................................ $1,702,414
Repurchase agreement, at value and cost (Note 1).......................................................... 376,185
U.S. currency..................................................................................
$ 523
Foreign currencies (cost $68,437)..............................................................
68,367 68,890
---------
Receivable for securities sold (Note 1)................................................................... 142,281
Dividends receivable...................................................................................... 528
----------
Total assets.............................................................................................. 2,290,298
----------
Liabilities:
Payable for securities purchased.......................................................................... 311,650
Payable for professional fees............................................................................. 10,800
Payable for printing and postage expenses................................................................. 6,000
Payable for investment management and administration fees (Note 2)........................................ 3,230
Payable for Trustees' fees and expenses (Note 2).......................................................... 2,400
Payable for custodian fees (Note 1)....................................................................... 446
Accrued expenses.......................................................................................... 1,200
----------
Total liabilities......................................................................................... 335,726
----------
Net assets.................................................................................................. $1,954,572
----------
----------
Net assets consist of:
Paid in capital........................................................................................... $1,940,587
Accumulated net investment loss........................................................................... (244)
Accumulated net realized loss on investments and foreign currency transactions............................ (6,927)
Net unrealized depreciation on translation of assets and liabilities in foreign currencies................ (191)
Net unrealized appreciation of investments................................................................ 21,347
----------
Total -- representing net assets applicable to shares of beneficial interest outstanding.................. $1,954,572
----------
----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 168
<PAGE>
GLOBAL CONSUMER PRODUCTS AND SERVICES PORTFOLIO
STATEMENT OF OPERATIONS
December 30, 1994 (commencement of operations) to April 30, 1995
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Investment income (Note 1):
Interest................................................................................................... $ 16,808
Dividends.................................................................................................. 7,024
---------
Total investment income.................................................................................... 23,832
---------
Expenses:
Audit fees................................................................................................. 8,400
Printing and postage expenses.............................................................................. 6,000
Investment management and administration fees (Note 2)..................................................... 3,230
Legal fees................................................................................................. 2,400
Trustees' fees and expenses (Note 2)....................................................................... 2,400
Custodian and fund accounting fees (Note 1)................................................................ 446
Other...................................................................................................... 1,200
---------
Total expenses............................................................................................. 24,076
---------
Net investment loss.......................................................................................... (244)
---------
Net realized and unrealized gain (loss) on investments and foreign currencies (Note 1):
Net realized loss on investments................................................................ $ (3,890)
Net realized loss on foreign currency transactions.............................................. (3,037)
---------
Net realized loss during the period...................................................................... (6,927)
Net change in unrealized depreciation on translation of assets and liabilities in foreign
currencies..................................................................................... (191)
Net change in unrealized appreciation of investments............................................ 21,347
---------
Net unrealized appreciation during the period............................................................ 21,156
---------
Net realized and unrealized gain on investments and foreign currencies....................................... 14,229
---------
Net increase in net assets resulting from operations......................................................... $ 13,985
---------
---------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 169
<PAGE>
GLOBAL CONSUMER PRODUCTS AND SERVICES PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DECEMBER 30, 1994
(COMMENCEMENT OF OPERATIONS)
TO APRIL 30, 1995 (UNAUDITED)
-----------------------------
<S> <C>
Increase in net assets
Operations:
Net investment loss................................................................................
$ (244)
Net realized loss on investments and foreign currency transactions.................................
(6,927)
Net change in unrealized depreciation on translation of assets and liabilities in foreign
currencies........................................................................................
(191)
Net change in unrealized appreciation of investments...............................................
21,347
-----------
Net increase in net assets resulting from operations...............................................
13,985
Beneficial interest transactions:
Contributions......................................................................................
1,998,501
Withdrawals........................................................................................
(158,014)
-----------
Net increase from beneficial interest transactions.................................................
1,840,487
-----------
Total increase in net assets.........................................................................
1,854,472
Net assets:
Beginning of period................................................................................
100,100
-----------
End of period......................................................................................
$ 1,954,572
-----------
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 170
<PAGE>
GLOBAL CONSUMER PRODUCTS AND SERVICES PORTFOLIO
SUPPLEMENTARY DATA
- --------------------------------------------------------------------------------
Contained below are ratios and supplemental data that have been derived from
information provided in the financial statements.
<TABLE>
<CAPTION>
DECEMBER 30, 1994
(COMMENCEMENT OF OPERATIONS)
TO APRIL 30, 1995 (UNAUDITED)
-----------------------------
<S> <C>
Ratios and supplemental data:
Net assets, end of period (in 000's)................................................................. $ 1,955
Ratio of net investment income to average net assets................................................. (0.05)%(a)
Ratio of operating expenses to average net assets.................................................... 5.36%(a)
Portfolio turnover rate.............................................................................. 244%(a)
- ----------------
<FN>
(a) Annualized.
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 171
<PAGE>
GLOBAL CONSUMER PRODUCTS AND SERVICES PORTFOLIO
NOTES TO
FINANCIAL STATEMENTS
April 30, 1995 (Unaudited)
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
Global Consumer Products and Services Portfolio ("Portfolio") is organized as a
New York Trust and is registered under the Investment Company Act of 1940, as
amended ("1940 Act"), as a diversified, open-end management investment company.
The following is a summary of significant accounting policies consistently
followed by the Portfolio in the preparation of the financial statements. The
policies are in conformity with generally accepted accounting principles.
(A) PORTFOLIO VALUATION
The Portfolio calculates the net asset value of and completes orders to purchase
or repurchase Portfolio shares of beneficial interest 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
Portfolio's Board of Trustees.
Portfolio securities which are primarily traded on foreign exchanges are
generally valued at the preceding closing values of such securities on their
respective exchanges, and those values are then translated into U.S. dollars at
the current exchange rates, except that when an occurrence subsequent to the
time a value was so established is likely to have materially changed such value,
then the fair value of those securities will be determined by consideration of
other factors by or under the direction of the Portfolio's Board of Trustees.
(B) FOREIGN CURRENCY TRANSLATION
The accounting records of the Portfolio are maintained in U.S. dollars. The
market values of foreign securities, currency holdings, and other assets and
liabilities are recorded in the books and records of the Portfolio after
translation to U.S. dollars based on the exchange rates on that day. The cost of
each security is determined using historical exchange rates. Income and
withholding taxes are translated at prevailing exchange rates when earned or
incurred.
The Portfolio 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 currencies, currency gains or losses realized between the trade and
settlement dates on securities transactions, and the difference between the
amounts of dividends, interest, and foreign withholding taxes recorded on the
Portfolio's books and the U.S. dollar equivalent of the amounts actually
received or paid. Net unrealized foreign exchange gains or losses arise from
changes in the value of assets and liabilities other than investments in
securities at period end, resulting from changes in exchange rates.
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 172
<PAGE>
GLOBAL CONSUMER PRODUCTS AND SERVICES PORTFOLIO
(C) REPURCHASE AGREEMENTS
With respect to repurchase agreements entered into by the Portfolio, it is the
Portfolio's policy to always receive, as collateral, United States government
securities or other high quality debt securities of which the value, including
accrued interest, is at least equal to the amount to be repaid to the Portfolio
under each agreement at its maturity.
(D) FORWARD FOREIGN CURRENCY CONTRACTS
A forward foreign currency contract ("Forward Contracts") is an agreement
between two parties to buy and sell a currency at a set price on a future date.
The market value of the Forward Contract fluctuates with changes in currency
exchange rates. The Forward Contract is marked-to-market daily and the change in
market value is recorded by the Portfolio as an unrealized gain or loss. When
the Forward Contract is closed, the Portfolio 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. Forward Contracts involve market risk in excess
of the amount shown in the Portfolio's "Statement of Assets and Liabilities."
The Portfolio 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
Portfolio may enter into Forward Contracts in connection with planned purchases
or sales of securities, or to hedge against adverse fluctuations in exchange
rates between currencies.
(E) OPTION ACCOUNTING PRINCIPLES
When the Portfolio writes a call or put option, an amount equal to the premium
received is included in the Portfolio's "Statement of Assets and Liabilities" as
an asset and an equivalent liability. The amount of the liability is
subsequently marked-to-market to reflect the current market value of the option.
The current market value of an option listed on a traded exchange is valued at
its last bid price, or, in the case of an over-the-counter option, is valued at
the average of the last bid prices obtained from brokers. If an option expires
on its stipulated expiration date or if the Portfolio enters into a closing
purchase transaction, a gain or loss is realized without regard to any
unrealized gain or loss on the underlying security, and the liability related to
such option is extinguished. If a written call option is exercised, a gain or
loss is realized from the sale of the underlying security and the proceeds of
the sale are increased by the premium originally received. If a written put
option is exercised, the cost of the underlying security purchased would be
decreased by the premium originally received. The Portfolio can write options
only on a covered basis, which, for a call, requires that the Portfolio holds
the underlying security and, for a put, requires the Portfolio to set aside
cash, U.S. government securities or other liquid, high-grade debt securities in
an amount not less than the exercise price or otherwise provide adequate cover
at all times while the put option is outstanding. The Portfolio may use options
to manage its exposure to the stock market and to fluctuations in currency
values or interest rates.
The premium paid by the Portfolio for the purchase of a call or put option is
included in the Portfolio's "Statement of Assets and Liabilities" as an
investment and subsequently "marked-to-market" to reflect the current market
value of the option. If an option which the Portfolio has purchased expires on
the stipulated expiration date, the Portfolio realizes a loss in the amount of
the cost of the option. If the Portfolio enters into a closing sale transaction,
the Portfolio realizes a gain or loss, depending on whether proceeds from the
closing sale transaction are greater or less than the cost of the option. If the
Portfolio exercises a call option, the cost of the securities acquired by
exercising the call is increased by the premium paid to buy the call. If the
Portfolio exercises a put option, it realizes a gain or loss from the sale of
the underlying security, and the proceeds from such sale are decreased by the
premium originally paid.
The risk associated with purchasing options is limited to the premium originally
paid. The risk in writing a call option is that the Portfolio may forego the
opportunity of profit if the market value of the underlying security or index
increases and the option is exercised. The risk in writing a put option is that
the Portfolio may incur a loss if the market value of the underlying security or
index decreases and the option is exercised. In addition, there is the risk the
Portfolio 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
Portfolio is required to pledge to the broker an amount of cash or securities
equal to the minimum "initial margin" requirements of the exchange on which the
contract is traded. Pursuant to the contract, the Portfolio agrees to receive
from or pay to the broker an amount of cash equal to the daily fluctuation in
value of the contract. Such receipts or payments are known as "variation margin"
and are recorded by the Portfolio as unrealized gains or losses. When the
contract is closed, the Portfolio records a realized gain or loss equal to the
difference between the value of the contract at the time it was opened and the
value at the time it was closed. The potential
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 173
<PAGE>
GLOBAL CONSUMER PRODUCTS AND SERVICES PORTFOLIO
risk to the Portfolio is that the change in value of the underlying securities
may not correlate to the change in value of the contracts. The Portfolio may use
futures contracts to manage its exposure to the stock market and to fluctuations
in currency values or interest rates.
(G) SECURITY TRANSACTIONS AND RELATED INVESTMENT INCOME
Security transactions are accounted for on the trade date (date the order to buy
or sell is executed). The cost of securities sold is determined on a first-in,
first-out basis, unless otherwise specified. Dividends are recorded on the
ex-dividend date. Interest income is recorded on the accrual basis. Where a high
level of uncertainty exists as to its collection, income is recorded net of all
withholding tax with any rebate recorded when received. The Portfolio may trade
securities on other than normal settlement terms. This may increase the risk if
the other party to the transaction fails to deliver and causes the Portfolio to
subsequently invest at less advantageous prices.
(H) PORTFOLIO SECURITIES LOANED
For international securities, cash collateral is received by the Portfolio
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 Portfolio against loaned securities in the amount
at least equal to 102% of the market value of the loaned securities at the
inception of each loan. This collateral must be maintained at not less than 100%
of the market value of the loaned securities during the period of the loan. At
April 30, 1995, there were no securities on loan to brokers.
(I) TAXES
It is the policy of the Portfolio to meet the requirements of the Internal
Revenue Code of 1986, as amended ("Code"). Therefore, no provision has been made
for Federal taxes on income, capital gains, or unrealized appreciation of
securities held.
(J) FOREIGN SECURITIES
There are certain additional considerations and risks associated with investing
in foreign securities and currency transactions that are not inherent in
investments of domestic origin. The Portfolio's investments 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.
In addition, the Portfolio may focus its investments in certain related consumer
products and services industries, subjecting the Portfolio to greater risk than
a fund that is more diversified.
(K) INDEXED SECURITIES
The Portfolio may invest in indexed securities whose value is linked either
directly or indirectly to changes in foreign currencies, interest rates,
equities, indices, or other reference instruments. Indexed securities may be
more volatile than the reference instrument itself, but any loss is limited to
the amount of the original investment.
(L) RESTRICTED SECURITIES
The Portfolio is permitted to invest in privately placed restricted securities.
These securities may be resold in transactions exempt from registration or to
the public if the securities are registered. Disposal of these securities may
involve time-consuming negotiations and expense, and prompt sale at an
acceptable price may be difficult.
2. RELATED PARTIES
G.T. Capital is the Portfolio's investment manager and administrator. The
Portfolio pays investment management and administration fees to G.T. Capital at
the annualized rate of 0.725% on the first $500 million of average daily net
assets of the Portfolio; 0.70% on the next $500 million; 0.675% on the next $500
million; and 0.65% on amounts thereafter. These fees are computed daily and paid
monthly.
The Portfolio pays each of its Trustees who is not an employee, officer or
director of G.T. Capital, G.T. Global Financial Services, Inc. or G.T. Global
Investor Services Inc. $500 per year plus $150 for each meeting of the board or
any committee thereof attended by the Trustees.
At April 30, 1995, all of the shares of beneficial interest of the Portfolio
were owned either by G.T. Global Consumer Products and Services Fund or G.T.
Capital.
3. PURCHASES AND SALES OF SECURITIES
For the period ended April 30, 1995, purchases and sales of investment
securities by the Portfolio, other than short-term investments, aggregated
$2,391,198 and $788,622, respectively. There were no purchases or sales of U.S.
government obligations by the Portfolio for the period ended April 30, 1995.
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 174
<PAGE>
G.T. GLOBAL THEME FUNDS
NOTES
- --------------------------------------------------------------------------------
Statement of Additional Information Page 175
<PAGE>
G.T. GLOBAL THEME FUNDS
NOTES
- --------------------------------------------------------------------------------
Statement of Additional Information Page 176
<PAGE>
G.T. GLOBAL THEME FUNDS
NOTES
- --------------------------------------------------------------------------------
Statement of Additional Information Page 177
<PAGE>
G.T. GLOBAL THEME FUNDS
[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 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 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 FUNDS
G.T. GLOBAL GROWTH & INCOME FUND
Invests in blue-chip stocks and government bonds from around the world
FIXED 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. INVESTMENT FUNDS, INC., G.T. GLOBAL
FINANCIAL SERVICES FUND, GLOBAL FINANCIAL SERVICES PORTFOLIO, G.T. GLOBAL
INFRASTRUCTURE FUND, GLOBAL INFRASTRUCTURE PORTFOLIO, G.T. GLOBAL NATURAL
RESOURCES FUND, GLOBAL NATURAL RESOURCES PORTFOLIO, G.T. GLOBAL CONSUMER
PRODUCTS AND SERVICES FUND, GLOBAL CONSUMER PRODUCTS AND SERVICES PORTFOLIO,
G.T. GLOBAL HEALTH CARE FUND, G.T. GLOBAL TELECOMMUNICATIONS 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 IN SUCH JURISDICTION TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER.
THESX506MC
<PAGE>
G.T. INVESTMENT FUNDS, INC.
PART C: OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
(a) FINANCIAL STATEMENTS -- The following audited financial statements as of
October 31, 1994, and for the fiscal year then ended, have been previously filed
in the Statements of Additional Information of the G.T. Global Income Funds
(consisting of G.T. Global Strategic Income Fund, G.T. Global Government Income
Fund and G.T. Global High Income Fund), G.T. Global Theme Funds (consisting of
G.T. Global Telecommunications Fund, G.T. Global Health Care Fund, G.T. Global
Financial Services Fund, G.T. Global Infrastructure Fund and G.T. Global Natural
Resources Fund), G.T. Global Growth & Income Fund, G.T. Global Emerging Markets
Fund and G.T. Latin America Growth Fund, each a series of Registrant, and are
not affected by this amendment:
-- Reports of Independent Accountants
-- Portfolios of Investments
-- Statements of Assets and Liabilities
-- Statements of Operations
-- Statements of Changes in Net Assets
-- Financial Highlights
-- Notes to Financial Statements
The following financial statement as of December 20, 1994 has been
previously filed in the Statement of Additional Information of the G.T. Global
Theme Funds, relating to the G.T. Global Consumer Products and Services Fund, a
series of the Registrant:
-- Report of Independent Accountants
-- Statement of Assets and Liabilities
-- Notes to Statement of Assets and Liabilities
The following unaudited financial statements for the period ended April 30,
1995, are included in the Statement of Additional Information for the G.T.
Global Theme Funds, relating to the G.T. Global Consumer Products and Services
Fund, a series of the Registrant, and are filed herewith:
-- Portfolio of Investments
-- Statement of Assets and Liabilities
-- Statement of Operations
-- Statement of Changes in Net Assets
-- Financial Highlights
-- Notes to Financial Statements
C-1
<PAGE>
(b) EXHIBITS REQUIRED BY PART C, ITEM 24 OF FORM N-1A.
(1)(a) The Registrant's Articles of Incorporation as amended or
supplemented.(1)
(1)(b) Articles Supplementary to Registrant's Articles of
Incorporation dated March 11, 1992.(3)
(1)(c) Articles Supplementary to Registrant's Articles of
Incorporation dated August 12, 1992.(7)
(1)(d) Articles of Amendment to Registrant's Articles of
Incorporation dated January 25, 1993.(11)
(1)(e) Articles Supplementary to Registrant's Articles of
Incorporation dated November 15, 1993.(11)
(1)(f) Articles Supplementary to Registrant's Articles of
Incorporation dated January 26, 1994.(11)
(1)(g) Articles Supplementary to Registrant's Articles of
Incorporation dated January 26, 1994.(11)
(1)(h) Articles Supplementary to Registrant's Articles of
Incorporation dated September 23, 1994.(15)
(1)(i) Articles Supplementary to Registrant's Articles of
Incorporation dated January 30, 1995 -- Filed herewith.
(2) The Registrant's By-Laws.(1)
(3) Not Applicable.
(4) Specimen copy of a share certificate.(1)
(5)(a) The Investment Management and Administration Contract dated
April 19, 1989.(1)
(5)(b) Investment Management and Administration Contract Fee Letter
relating to:
(i) G.T. Global Growth & Income Fund(1)
(ii) G.T. Latin America Growth Fund and G.T. Global Small
Companies Fund(1)
(iii) G.T. Global Telecommunications Fund(1)
(iv) Withdrawn
(v) G.T. Global Emerging Markets Fund(3)
(5)(c) Administration Contract relating to:
(i) G.T. Global High Income Fund(8)
(ii) G.T. Global Infrastructure Fund(12)
(iii) G.T. Global Natural Resources Fund(12)
(iv) G.T. Global Financial Services Fund(12)
(v) Administration Contract Fee Letter relating to the G.T.
Global Consumer Products and Services Fund -- Filed
herewith.
(6)(a) Distribution Agreement relating to Class A shares.(11)
(6)(b) Distribution Agreement relating to Class B shares.(11)
(7) Not Applicable.
(8) The Custodian Agreement between the Registrant and State
Street Bank and Trust Company.(1)
(9)(a) The Transfer Agent Contract dated May 25, 1990.(1)
C-2
<PAGE>
(9)(b) Other material contracts:
(i) Broker/dealer sales contract(1)
(ii) Bank sales contract(1)
(iii) Agency sales contract(1)
(iv) Foreign sales contract(1)
(10)(a) Opinion and consent of counsel relating to G.T. Global
Government Income Fund and G.T. Global Strategic Income Fund
(formerly G.T. Global Bond Fund).(2)
(10)(b) Opinion and consent of counsel relating to G.T. Global
Health Care Fund.(1)
(10)(c) Opinion and consent of counsel relating to G.T. Global
Growth & Income Fund.(2)
(10)(d) Opinion and consent of counsel relating to G.T. Latin
America Growth Fund and G.T. Global Small Companies Fund.(1)
(10)(e) Opinion and consent of counsel relating to G.T. Global
Telecommunications Fund.(1)
(10)(f) Opinion and consent of counsel relating to G.T. Global
Emerging Markets Fund.(3)
(10)(g) Opinion and consent of counsel relating to G.T. Global High
Income Fund.(7)
(10)(h) Opinion and consent of counsel relating to G.T. Global
Infrastructure Fund and G.T. Global Natural Resources
Fund.(13)
(10)(i) Opinion and consent of counsel relating to G.T. Global
Consumer Products and Services Fund and G.T. Global
Financial Services Fund.(16)
(11)(a) Consents of Coopers & Lybrand, Independent Accountants,
relating to:
(i) G.T. Global Government Income Fund.(18)
(ii) G.T. Global Strategic Income Fund.(18)
(iii) G.T. Global Health Care Fund. -- Filed herewith
(iv) G.T. Global Growth & Income Fund.(18)
(v) G.T. Latin America Growth Fund.(18)
(vi) Not Applicable
(vii) Not Applicable
(viii) G.T. Global Emerging Markets Fund.(18)
(ix) G.T. Global Telecommunications Fund. -- Filed herewith
(x) G.T. Global High Income Fund.(18)
(xi) G.T. Global Financial Services Fund. -- Filed herewith
(xii) G.T. Global Infrastructure Fund. -- Filed herewith
(xiii) G.T. Global Natural Resources Fund. -- Filed herewith
(xiv) G.T. Global Consumer Products and Services Fund. -- Filed
herewith
(12) Not Applicable.
(13) Not Applicable.
(14) Model retirement plan -- G.T. Global Individual Retirement
Account Disclosure Statement and Application.(1)
(15)(a) Distribution Plan adopted pursuant to Rule 12b-1 relating to
Class A Shares.(11)
(15)(b) Distribution Plan adopted pursuant to Rule 12b-1 relating to
Class B shares.(11)
C-3
<PAGE>
(16) Schedules of Computation of Performance Data relating to the
Class A and Class B shares of:
(i) G.T. Global Government Income Fund.(18)
(ii) G.T. Global Strategic Income Fund.(18)
(iii) G.T. Global Health Care Fund.(18)
(iv) G.T. Global Growth & Income Fund.(18)
(v) G.T. Latin America Growth Fund.(18)
(vi) G.T. Global Telecommunications Fund.(18)
(vii) G.T. Global Emerging Markets Fund.(18)
(viii) G.T. Global High Income Fund.(18)
(ix) G.T. Global Financial Services Fund.(18)
(x) G.T. Global Infrastructure Fund.(18)
(xi) G.T. Global Natural Resources Fund.(18)
Other Exhibits:
(a) Power of Attorney -- superseded.
(b) Power of Attorney -- superseded.
(c) Powers of Attorney for Helge K. Lee, Peter R. Guarino and
David J. Thelander. -- Filed herewith.
- ------------------------
(1) Incorporated by reference to the identically enumerated Exhibit of
Post-Effective Amendment No. 16 to the Registration Statement on Form N-1A,
filed on January 17, 1992.
(2) Incorporated by reference to Exhibit (10) of Pre-Effective Amendment No. 1
to the Registration Statement on Form N-1A, filed on February 26, 1988.
(3) Incorporated by reference to the identically enumerated Exhibit of
Post-Effective Amendment No. 20 to the Registration Statement on Form N-1A,
filed on May 11, 1992.
(4) Incorporated by reference to the identically enumerated Exhibit of
Post-Effective Amendment No. 18 to the Registration Statement on Form N-1A,
filed on February 20, 1992.
(5) Incorporated by reference to Exhibit (11)(b) of Post-Effective Amendment No.
21 to the Registration Statement on Form N-1A, filed on July 1, 1992.
(6) Incorporated by reference to Exhibit (11)(b) of Post-Effective Amendment No.
23 to the Registration Statement on Form N-1A, filed on August 31, 1992.
(7) Incorporated by reference to the identically enumerated Exhibit of
Post-Effective Amendment No. 24 to the Registration Statement on Form N-1A,
filed on October 16, 1992.
(8) Incorporated by reference to the identically enumerated Exhibit of
Post-Effective Amendment No. 28 to the Registration Statement on Form N-1A,
filed on December 18, 1992.
(9) Incorporated by reference to the identically enumerated Exhibit of
Post-Effective Amendment No. 29 to the Registration Statement on Form N-1A,
filed on December 28, 1992.
(10) Incorporated by reference to the identically enumerated Exhibit of
Post-Effective Amendment No. 30 to the Registration Statement on Form N-1A,
filed on January 29, 1993.
(11) Incorporated by reference to the identically enumerated Exhibit of
Post-Effective Amendment No. 32 to the Registration Statement on Form N-1A,
filed on March 1, 1994.
(12) Incorporated by reference to the identically enumerated Exhibit of
Post-Effective No. 33 to the Registration Statement on Form N-1A, filed on
April 11, 1994.
C-4
<PAGE>
(13) Incorporated by reference to the identicially enumerated Exhibit of
Post-Effective Amendment No. 34 to the Registration Statement on Form N-1A,
filed on May 26, 1994.
(14) Incorporated by reference to the identically enumerated Exhibit of
Post-Effective Amendment No. 36 to the Registration Statement on Form N1-A,
filed on September 2, 1994.
(15) Incorporated by reference to the identically enumerated Exhibit of
Post-Effective Amendment No. 37 to the Registration Statement on Form N1-A,
filed on September 23, 1994.
(16) Incorporated by reference to identically enumerated Exhibit of
Post-Effective Amendment No. 39 to the Registration Statement on Form N1-A,
filed on December 22, 1994.
(17) Incorporated by reference to the identically enumerated Exhibit of
Post-Effective Amendment No. 40 to the Registration Statement on Form N-1A,
filed on December 30, 1994.
(18)_Incorporated by reference to the identically enumerated Exhibit of
Post-Effective Amendment No. 41 to the Registration Statement on Form N-1A,
filed on March 1, 1995.
ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH THE REGISTRANT
None.
C-5
<PAGE>
ITEM 26. NUMBER OF HOLDERS OF SECURITIES
As of May 31, 1995:
<TABLE>
<CAPTION>
TITLE OF CLASS NUMBER OF RECORD HOLDERS
- -------------------------------------------------------------------------- --------------------------
<S> <C>
Capital Stock, $.0001 par value, of:
G.T. Global Growth & Income Fund Class A............................ 26,016
G.T. Global Growth & Income Fund Class B............................ 33,240
G.T. Global Strategic Income Fund Class A........................... 17,237
G.T. Global Strategic Income Fund Class B........................... 30,167
G.T. Global Government Income Fund Class A.......................... 26,530
G.T. Global Government Income Fund Class B.......................... 16,342
G.T. Global High Income Fund Class A................................ 8,705
G.T. Global High Income Fund Class B................................ 14,474
G.T. Global Health Care Fund Class A................................ 49,607
G.T. Global Health Care Fund Class B................................ 7,221
G.T. Latin America Growth Fund Class A.............................. 35,327
G.T. Latin America Growth Fund Class B.............................. 25,978
G.T. Global Telecommunications Fund Class A......................... 154,983
G.T. Global Telecommunications Fund Class B......................... 132,431
G.T. Global Financial Services Fund Class A......................... 661
G.T. Global Financial Services Fund Class B......................... 562
G.T. Global Infrastructure Fund Class A............................. 6,274
G.T. Global Infrastructure Fund Class B............................. 7,045
G.T. Global Natural Resources Fund Class A.......................... 2,086
G.T. Global Natural Resources Fund Class B.......................... 2,178
G.T. Global Emerging Markets Fund Class A........................... 40,678
G.T. Global Emerging Markets Fund Class B........................... 38,647
G.T. Global Currency Fund........................................... 1
G.T. Global Small Companies Fund.................................... 1
G.T. Global Consumer Products and Services Fund Class A............. 229
G.T. Global Consumer Products and Services Fund Class B............. 116
</TABLE>
ITEM 27. INDEMNIFICATION
Article VII(g) of the Registrant's Articles of Incorporation provides for
indemnification of certain persons acting on behalf of the Fund.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933, as amended ("1933 Act") may be permitted to Directors, officers and
controlling persons by the Registrant's Articles of Incorporation, By-Laws, or
otherwise, the Registrant has been advised that in the opinion of the Securities
and Exchange Commission ("Commission") such indemnification is against public
policy as expressed in the 1933 Act, and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other than the
payment by the Registrant of expenses incurred or paid by a Director, officer or
controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such Director, officer or controlling person
in connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
C-6
<PAGE>
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the 1933 Act
and will be governed by the final adjudication of such issues.
Effective January 21, 1988, Registrant and the Directors and officers of the
Registrant obtained coverage under a Professional Indemnity insurance policy.
The terms and conditions of policy coverage conform generally to the standard
coverage available throughout the investment company industry. Similar coverage
by separate policies is afforded the investment manager and its directors,
officers and employees.
ITEM 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER
See the material under the heading "Management" included in Part A
(Prospectus) of this Amendment and the material appearing under the headings
"Directors and Officers" and "Management" included in Part B (Statement of
Additional Information) of this Amendment. Information as to the Directors and
Officers of the Adviser is included in its Form ADV (File No. 801-10254), filed
with the Commission, which is incorporated herein by reference thereto.
ITEM 29. PRINCIPAL UNDERWRITERS
(a) G.T. Global Financial Services, Inc. is also the principal underwriter
for the following other investment companies: G.T. Global Growth Series (which
includes the following funds: G.T. Global: America Growth Fund, G.T. Global:
Europe Growth Fund, G.T. Global: International Growth Fund, G.T. Global: Japan
Growth Fund, G.T. Global: New Pacific Growth Fund and G.T. Global: Worldwide
Growth Fund); G.T. Investment Portfolios, Inc. (which includes one fund: G.T.
Global Dollar Fund); G.T. Global Variable Investment Series (which includes five
funds in operation: G.T. Global: Variable New Pacific Fund, G.T. Global:
Variable Europe Fund, G.T. Global: Variable America Fund, G.T. Global: Variable
International Fund and G.T. Global: Money Market Fund); and G.T. Global Variable
Investment Trust (which includes seven funds in operation: G.T. Global: Variable
Latin America Fund, G.T. Global: Variable Telecommunications Fund, G.T. Global:
Variable Growth & Income Fund, G.T. Global: Variable Strategic Income Fund, G.T.
Global: Variable Emerging Markets Fund, G.T. Global: Variable Global Government
Income Fund and G.T. Global: Variable U.S. Government Income Fund).
(b) Directors and Officers of G.T. Global Financial Services, Inc.
Unless otherwise indicated, the business address of each person listed is 50
California Street, San Francisco, CA 94111.
<TABLE>
<CAPTION>
POSITIONS AND OFFICES POSITIONS AND OFFICES
NAME WITH UNDERWRITER WITH REGISTRANT
- -------------------------------------------- ---------------------------------- ----------------------------------
<S> <C> <C>
David A. Minella Chairman of the Board of Chairman of the Board of Directors
Directors and President and President
William J. Guilfoyle Senior Vice President -- Marketing None
and Director
James R. Tufts Senior Vice President -- Finance Vice President, Treasurer and
and Director Chief Financial Officer
Helge K. Lee Senior Vice President and Vice President and Secretary
Secretary
James H. Grifo Senior Vice President -- National None
Sales Manager and Director
Raymond R. Cunningham Senior Vice President -- National None
Bank Sales
</TABLE>
C-7
<PAGE>
<TABLE>
<CAPTION>
POSITIONS AND OFFICES POSITIONS AND OFFICES
NAME WITH UNDERWRITER WITH REGISTRANT
- -------------------------------------------- ---------------------------------- ----------------------------------
<S> <C> <C>
Donald F. MacLeod Senior Vice President -- Regional None
375 Park Avenue Sales Manager
Suite 3401
New York, NY 10152
Stephen A. Maginn Senior Vice President -- Regional None
519 S. Juanita Sales Manager
Redondo Beach, CA 90277
Robert J. Wolf Senior Vice President -- Regional None
71 South 20th Street Sales Manager
Suite 120
Battlecreek, MI 49015
Peter R. Guarino Assistant Secretary Assistant Secretary
David P. Anderson, Jr. Vice President None
1012 William
Plymouth, MI 48170
Bruce W. Caldwell Vice President None
1003 Medinah Court
Kennesaw, GA 30144
Anthony DiBacco Vice President None
30585 Via Lindosa Way
Laguna Miguel, CA 92677
Timothy W. Dolan Vice President None
16 Deerfield Drive
Medfield, MA 02052
Stephen Donovick Vice President None
212 Carriage Court
Coppel, TX 75019
Philip D. Edelstein Vice President None
9 Huntly Circle
Palm Beach Gardens, FL 33418
Jon Fessel Vice President None
1781 Pine Harrier Circle
Sarasota, FL 34231
Per Furmark Vice President None
354 East 77th Street, #3A
New York, NY 10021
Ned E. Hammond Vice President None
8080 N. Central Express
Suite 400
Dallas, TX 75206
Steven E. Hinkhouse Vice President None
11010 West 126th Terrace
Overland Park, KS 66213
Eric Johnson Vice President None
30B 19th Street
Hermosa Beach, CA 90254
Campbell Judge Vice President None
4312 Linden Hills Blvd., #202
Minneapolis, MN 55410
</TABLE>
C-8
<PAGE>
<TABLE>
<CAPTION>
POSITIONS AND OFFICES POSITIONS AND OFFICES
NAME WITH UNDERWRITER WITH REGISTRANT
- -------------------------------------------- ---------------------------------- ----------------------------------
<S> <C> <C>
Richard Kashnowski Vice President None
1454 High School Drive
Brentwood, MO 63144
Allen M. Kuhn Vice President None
5518 S. Saratoga Street
New Orleans, LA 70115
Jeffrey S. Kulik Vice President None
10013 Cape Ann Drive
Columbia, MD 21046
Steven C. Manns Vice President None
3025 Caswell Drive
Troy, MI 48084
Michael S. Martin Vice President None
1936 Palisides Lake Ct.
Lake Oswego, OR 97034
C. David Matthews Vice President None
25804 Woodpath Trail
Westlake, OH 44145
Anthony R. Rogers Vice President None
100 Southbank Drive
Cary, NC 27511
James Sandidge Vice President None
758 Chimney Creek Drive
Golden, CO 80401
Philip Schertz Vice President None
25 Ivy Place
Wayne, NJ 07470
Peter Sykes Vice President None
650 Lake Street, #12
San Francisco, CA 94118
Tommy D. Wells Vice President None
25 Crane Drive
San Anselmo, CA 94960
Todd H. Westby Vice President None
3405 Goshen Road
Newtown Square, PA 19073
Brian A. Williams Vice President None
655 Cherry Street
Winnetka, IL 60093
Eric T. Zeigler Vice President None
437 30th Street
Manhattan Beach, CA 90266
</TABLE>
(c) None.
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS
Accounts, books and other records required by Rules 31a-1 and 31a-2 under
the Investment Company Act of 1940, as amended, are maintained and held in the
offices of the Registrant and its investment manager, G.T. Capital Management,
Inc., 50 California Street, 27th Floor, San Francisco, California 94111.
C-9
<PAGE>
Records covering stockholder accounts and portfolio transactions are also
maintained and kept by the Registrant's Transfer Agent, G.T. Global Investor
Services, Inc., 50 California Street, San Francisco, CA 94111, and by the
Registrant's Custodian and Accounting Agent, State Street Bank and Trust
Company, 225 Franklin Street, Boston, Massachusetts 02110.
ITEM 31. MANAGEMENT SERVICES
None.
ITEM 32. UNDERTAKINGS
None
C-10
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, as amended, the Registrant hereby certifies that
it meets all of the requirements for effectiveness of this Post-Effective
Amendment to its Registration Statement pursuant to Rule 485(b) under the
Securities Act of 1933 and has duly caused this Post-Effective Amendment to this
Registration Statement to be signed on its behalf by the undersigned, thereto
duly authorized, in the City of San Francisco, and the State of California, on
the 30th day of June, 1995.
G.T. INVESTMENT FUNDS, INC.
By: David A. Minella*
President
Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment to the Registration Statement of G.T. Investment Funds,
Inc. has been signed below by the following persons in the capacities indicated
on June 30, 1995.
President, Director and
David A. Minella* Chairman of the Board
(Principal Executive Officer)
/s/ JAMES R. TUFTS Vice President, Treasurer
- ---------------------------------------- and Principal Financial
James R. Tufts Officer
/s/ KENNETH W. CHANCEY
- ---------------------------------------- Vice President and Principal
Kenneth W. Chancey Accounting Officer
C. Derek Anderson* Director
Arthur C. Patterson* Director
Frank S. Bayley* Director
Ruth H. Quigley* Director
*By: /s/ PETER R. GUARINO
-----------------------------------
Peter R. Guarino
Attorney-in-Fact, pursuant to
Power-of-Attorney filed herewith as
Other Exhibits (c)
C-11
<PAGE>
SIGNATURES
Global Investment Portfolio has duly caused this Post-Effective Amendment of
G.T. Investment Funds, Inc. to be signed on its behalf by the undersigned,
thereto duly authorized, in the City of San Francisco, and the State of
California, on the 30th day of June, 1995.
GLOBAL INVESTMENT PORTFOLIO
By: David A. Minella*
President
This Post-Effective Amendment to the Registration Statement of G.T.
Investment Funds, Inc. has been signed below by the following persons in the
capacities indicated on June 30, 1995.
President, Trustee and
David A. Minella* Chairman of the Board
(Principal Executive Officer)
/s/ JAMES R. TUFTS Vice President, Treasurer
- ---------------------------------------- and Principal Financial
James R. Tufts Officer
/s/ KENNETH W. CHANCEY
- ---------------------------------------- Vice President and Principal
Kenneth W. Chancey Accounting Officer
C. Derek Anderson* Trustee
Arthur C. Patterson* Trustee
Frank S. Bayley* Trustee
Ruth H. Quigley* Trustee
*By: /s/ PETER R. GUARINO
-----------------------------------
Peter R. Guarino
Attorney-in-Fact, pursuant to
Power of Attorney filed herewith as
Other Exhibits (c)
C-12
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<PAGE>
EXHIBIT 27.A
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE G.T.
GLOBAL CONSUMER PRODUCTS AND SERVICES FUND'S SEMI-ANNUAL FINANCIAL STATEMENTS
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 121
<NAME> GT GLOBAL CONSUMER PRODUCTS & SERVICES-CLASS A FUND
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> OCT-31-1995
<PERIOD-START> DEC-30-1994
<PERIOD-END> APR-30-1995
<EXCHANGE-RATE> 1
<INVESTMENTS-AT-COST> 1933
<INVESTMENTS-AT-VALUE> 1954
<RECEIVABLES> 200
<ASSETS-OTHER> 48
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 2202
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 81
<TOTAL-LIABILITIES> 81
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 2095
<SHARES-COMMON-STOCK> 139
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 12
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (7)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 21
<NET-ASSETS> 2121
<DIVIDEND-INCOME> 7
<INTEREST-INCOME> 17
<OTHER-INCOME> 0
<EXPENSES-NET> (12)
<NET-INVESTMENT-INCOME> 12
<REALIZED-GAINS-CURRENT> (7)
<APPREC-INCREASE-CURRENT> 21
<NET-CHANGE-FROM-OPS> 26
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 135
<NUMBER-OF-SHARES-REDEEMED> (1)
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 2021
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 182
<AVERAGE-NET-ASSETS> 1057
<PER-SHARE-NAV-BEGIN> 11.43
<PER-SHARE-NII> .10
<PER-SHARE-GAIN-APPREC> .12
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 11.65
<EXPENSE-RATIO> 2.40
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<PAGE>
EXHIBIT 27.B
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE G.T.
GLOBAL CONSUMER PRODUCTS AND SERVICES FUND'S SEMI-ANNUAL FINANCIAL STATEMENTS
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 122
<NAME> G.T. GLOBAL CONSUMER PRODUCTS AND SERVICES FUND-CLASS B
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> OCT-31-1995
<PERIOD-START> DEC-30-1994
<PERIOD-END> APR-30-1995
<EXCHANGE-RATE> 1
<INVESTMENTS-AT-COST> 1933
<INVESTMENTS-AT-VALUE> 1954
<RECEIVABLES> 200
<ASSETS-OTHER> 48
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 2202
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 81
<TOTAL-LIABILITIES> 81
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 2095
<SHARES-COMMON-STOCK> 43
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 12
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (7)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 21
<NET-ASSETS> 2121
<DIVIDEND-INCOME> 7
<INTEREST-INCOME> 17
<OTHER-INCOME> 0
<EXPENSES-NET> (12)
<NET-INVESTMENT-INCOME> 12
<REALIZED-GAINS-CURRENT> (7)
<APPREC-INCREASE-CURRENT> 21
<NET-CHANGE-FROM-OPS> 26
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 41
<NUMBER-OF-SHARES-REDEEMED> (2)
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 2021
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 182
<AVERAGE-NET-ASSETS> 1057
<PER-SHARE-NAV-BEGIN> 11.43
<PER-SHARE-NII> .08
<PER-SHARE-GAIN-APPREC> .12
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 11.63
<EXPENSE-RATIO> 2.90
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<PAGE>
EXHIBIT 27.C
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE GLOBAL
CONSUMER PRODUCTS AND SERVICES PORTFOLIO'S SEMI-ANNUAL FINANCIAL STATEMENTS AND
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 04
<NAME> GLOBAL CONSUMER PRODUCTS AND SERVICES PORTFOLIO
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> OCT-31-1995
<PERIOD-START> DEC-30-1994
<PERIOD-END> APR-30-1995
<EXCHANGE-RATE> 1
<INVESTMENTS-AT-COST> 2057
<INVESTMENTS-AT-VALUE> 2079
<RECEIVABLES> 142
<ASSETS-OTHER> 69
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 2290
<PAYABLE-FOR-SECURITIES> 312
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 23
<TOTAL-LIABILITIES> 335
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 1941
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (7)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 21
<NET-ASSETS> 1955
<DIVIDEND-INCOME> 7
<INTEREST-INCOME> 17
<OTHER-INCOME> 0
<EXPENSES-NET> (24)
<NET-INVESTMENT-INCOME> 0
<REALIZED-GAINS-CURRENT> (7)
<APPREC-INCREASE-CURRENT> 21
<NET-CHANGE-FROM-OPS> 14
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1998
<NUMBER-OF-SHARES-REDEEMED> (158)
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 1854
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 3
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 24
<AVERAGE-NET-ASSETS> 991
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 5.36
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<PAGE>
EXHIBIT 99.B1
ARTICLES SUPPLEMENTARY
TO
ARTICLES OF INCORPORATION
OF
G.T. INVESTMENT FUNDS, INC.
G.T. Investment Funds, Inc. (the "Company"), a Maryland corporation,
having its principal office in Baltimore, Maryland, organized on October 29,
1987, hereby certifies to the State Department of Assessments and Taxation of
Maryland that:
FIRST: The Company is currently authorized to issue six billion
(6,000,000,000) shares of capital stock (par value $.0001 per share)
amounting in the aggregate to a par value of six hundred thousand dollars
($600,000.00). The shares of capital stock have been classified among the
fourteen series of the Company as follows:
G.T. Global Government Income Fund (400 million shares)
G.T. Global Strategic Income Fund (200 million shares)
G.T. Global Growth & Income Fund (200 million shares)
G.T. Global Health Care Fund (200 million shares)
G.T. Global Small Companies Fund (200 million shares)
G.T. Global Currency Fund (200 million shares)
G.T. Latin America Growth Fund (200 million shares)
G.T. Global Telecommunications Fund (400 million shares)
G.T. Global Financial Services Fund (200 million shares)
G.T. Global Emerging Markets Fund (200 million shares)
G.T. Global High Income Fund (200 million shares)
G.T. Global Infrastructure Fund (200 million shares)
G.T. Global Natural Resources Fund (200 million shares)
G.T. Global Consumer Products and Services Fund (200 million shares)
Within each series of the Company, the capital stock has been divided
equally into two classes: Class A and Class B capital stock.
SECOND: By action of the Company's Board of Directors in accordance
with the Company's charter, one hundred million (100,000,000) shares of
capital stock that the Company is authorized to issue but has not previously
designated as representing a class or a series are hereby classified as
Advisor Class capital stock of each of the Company's fourteen existing series
(G.T. Global Government Income Fund, G.T. Global Strategic Income Fund,
G.T. Global Growth & Income Fund, G.T. Global Health Care Fund, G.T. Global
Small Companies Fund, G.T. Global Currency Fund, G.T. Latin America Growth
Fund, G.T. Global Telecommunications Fund, G.T. Global Financial Services
Fund, G.T. Global Emerging Markets Fund, G.T. Global High Income Fund,
G.T. Global Infrastructure Fund, G.T. Global Natural Resources Fund and
<PAGE>
G.T. Global Consumer Products and Services Fund) representing a total of one
billion four hundred million (1,400,000,000) shares of the Company's capital
stock.
THIRD: The Class A capital stock, Class B capital stock and the Advisor
Class capital stock of each of the Funds represent interests in the same
investment portfolio of each such Fund. Shares of the Advisor Class capital
stock of a Fund shall be subject to all provisions of Article V in the
Company's Articles of Incorporation relating to stock of the Company
generally and shall have the same preferences, conversion and other rights,
voting powers, restrictions, limitations as to dividends, qualifications and
terms and conditions of redemption as shares of Class A capital stock and
Class B capital stock of such Fund, except as follows:
(1) Expenses related to the distribution of each class of shares
of a Fund shall be borne solely by such class;
(2) The bearing of such expenses solely by each class of shares
of a Fund shall be appropriately reflected (in the manner
determined by the Board of Directors) in the net asset value,
dividend, distribution and liquidation rights of the shares of
such class;
(3) The Class A capital stock of each Fund shall be subject to a
front-end sales load and a Rule 12b-1 service and distribution
fee as determined by the Board of Directors from time to time
prior to issuance of such stock;
(4) The Class B capital stock of each Fund shall be subject to a
contingent deferred sales charge and a Rule 12b-1 service
and distribution fee as determined by the Board of Directors
from time to time prior to issuance of such stock;
(5) The Advisor Class capital stock of each Fund shall not be
subject to either a front-end or contingent deferred sales
charge or Rule 12b-1 service and distribution fees; and
(6) Unless otherwise expressly provided in the Articles of
Incorporation, including any Articles Supplementary
creating any class or series of capital stock, on each matter
submitted to a vote of stockholders of the Company, each
holder of a share of capital stock of the Company shall be
entitled to one vote for each share standing in such holder's
name on the books of the Company, irrespective of the class
or series thereof, and all shares of all classes and series shall
vote together as a single class; provided, however, that
<PAGE>
(a) as to any matter with respect to which a separate vote
of any class or series is required by the Investment
Company Act of 1940, as amended and in effect from
time to time, or any rules, regulations or orders issued
thereunder, or by the Maryland General Corporation
Law, such requirement as to a separate vote by that
class or series shall apply in lieu of a general vote of all
classes and series as described above;
(b) in the event that the separate vote requirements referred
to in paragraph (a), above, apply with respect to one or
more classes or series, then subject to paragraph (c), below,
the shares or all other classes and series not entitled to a
separate vote shall vote together as a single class; and
(c) as to any matter in which the judgment of the Board of
Directors (which shall be conclusive) does not affect the
interests of a particular class or series, such class or
series shall not be entitled to any vote and only the holders
of shares or one or more affected classes and series shall be
entitled to vote.
All shares of each particular class of a Fund shall represent an equal
proportionate interest in that class, and each share of a particular class
shall be equal to each other share of that class of that Fund.
FOURTH: The Company is registered with the Securities and Exchange
Commission as an open-end investment company under the Investment Company Act
of 1940, as amended.
IN WITNESS WHEREOF, the undersigned Vice President of the Company hereby
executed these Articles Supplementary on behalf of the Company and further
states under the penalties of perjury that, to the best of his knowledge,
information and belief, the matters and facts set forth herein are true in
all material respects.
Dated: January 30, 1995 /s/ HELGE K. LEE
_________________________________
Helge K. Lee
Vice President and Secretary
Attest: /s/ PETER R. GUARINO
_______________________
Peter R. Guarino
Assistant Secretary
<PAGE>
EXHIBIT 99.B5
LOGO
December 30, 1994
G.T. Capital Management, Inc.
50 California Street
27th Floor
San Francisco, CA 94111
RE: Administration Fee Agreement for
G.T. Global Consumer Products and Services Fund
_______________________________________________
Ladies and Gentlemen:
G.T. Investment Funds, Inc. (the "Company") has appointed G.T. Capital
Management, Inc. ("G.T. Capital") to act as administrator to a new fund
organized as a series of the Company, G.T. Global Consumer Products and
Services Fund (the "Fund"), pursuant to the terms of the Administration
Contract between the Company and G.T. Capital currently in effect (the
"Administration Contract"). For providing services to the Fund pursuant to
the Administration Contract, the Fund will pay G.T. Capital administration
fees at the annualized rate of .25% of the Fund's average daily net assets.
Such fees are to be calculated daily and paid monthly by the Fund.
Please indicate your agreement with the provisions of the foregoing paragraph
by executing this letter in the space set forth for such execution below.
Sincerely,
G.T. INVESTMENT FUNDS, INC.
By: /s/ F. CHRISTIAN WIGNALL
____________________________
F. Christian Wignall
Vice President
AGREED AND ACCEPTED:
G.T. CAPITAL MANAGEMENT, INC.
By: /s/ JAMES R. TUFTS
____________________________
James R. Tufts
Vice President - Finance
<PAGE>
EXHIBIT 99.B11
CONSENT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors of
G.T. Investment Funds, Inc.:
We hereby consent to the inclusion in the Post-Effective Amendment to the
Registration Statement of G.T. Investment Funds, Inc. on Form N-1A (File No.
33-19338) of our report dated December 20, 1994 on our audit of the statement
of assets and liabilities of G.T. Global Consumer Products and Services Fund
as of December 20, 1994. We further consent to the inclusion in such
Post-Effective Amendment of our reports dated December 16, 1994 on our audits
of the financial statements and financial highlights of G.T. Global Financial
Services Fund, Global Financial Services Portfolio, G.T. Global
Infrastructure Fund, Global Infrastructure Portfolio, G.T. Global Natural
Resources Fund, Global Natural Resources Portfolio, G.T. Global Health Care
Fund, and G.T. Global Telecommuniations Fund as of and for the year ended
October 31, 1994, which reports are included in the Annual Reports to
Shareholders for the year ended October 31, 1994 which are included in the
Registration Statement. We further consent to the references to our Firm
under the captions "Financial Highlights" in the Prospectus and "Independent
Accountants" in both the Prospectus and the Statement of Additional Information.
Coopers & Lybrand L.L.P.
Boston, Massachusetts
June 27, 1995
<PAGE>
POWER OF ATTORNEY
Each person whose signature appears below hereby constitutes and appoints
Helge K. Lee, Peter R. Guarino and David J. Thelander, and each of them, with
full power to act without the other, his or her true and lawful
attorney-in-fact and agent, with full power of substitution and
resubstitution, for him or her and in his or her full name, place and stead,
in any and all capacities (until revoked in writing) to sign any and all
Post-Effective Amendments to the Registration Statement, and to file the
same, with all exhibits thereto, and other documents in connection therewith,
with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to
do and perform each and every act and thing ratifying and confirming all that
said attorneys-in-fact and agents or any of them, or their or his substitute
or substitutes, may lawfully do or cause to be done by virtue hereof.
GLOBAL INVESTMENT PORTFOLIO
/s/ David A. Minella
- ------------------------- Trustee, Chairman of the June 20, 1995
David A. Minella Board and President
/s/ C. Derek Anderson
- ------------------------- Trustee June 20, 1995
C. Derek Anderson
/s/ Frank S. Bayley
- ------------------------- Trustee June 20, 1995
Frank S. Bayley
/s/ Arthur C. Patterson
- ------------------------- Trustee June 20, 1995
Arthur C. Patterson
/s/ Ruth H. Quigley
- -------------------------- Trustee June 20, 1995
Ruth H. Quigley
<PAGE>
EXHIBIT 99.B17
POWER OF ATTORNEY
Each person whose signature appears below hereby constitutes and appoints
Helge K. Lee, Peter R. Guarino and David J. Thelander, and each of them, with
full power to act without the other, his or her true and lawful
attorney-in-fact and agent, with full power of substitution and
resubstitution, for him or her and in his or her name, place and stead, in
any and all capacities (until revoked in writing) to sign any and all
Post-Effective Amendments to the Registration Statement, and to file the
same, with all exhibits thereto, and other documents in connection therewith,
with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to
do and perform each and every act and thing ratifying and confirming all that
said attorneys-in-fact and agents or any of them, or their or his substitute
or substitutes, may lawfully do or cause to be done by virtue hereof.
G.T. INVESTMENT FUNDS, INC.
/s/ DAVID A. MINELLA Director, Chairman of the June 20, 1995
- ------------------------- Board and President
David A. Minella
/s/ DEREK ANDERSON Director June 20, 1995
- -------------------------
C. Derek Anderson
/s/ FRANK. S. BAYLEY
_________________________ Director June 20, 1995
Frank S. Bayley
/s/ ARTHUR C. PATTERSON Director June 20, 1995
- -------------------------
Arthur C. Patterson
/s/ RUTH H. QUIGLEY
_________________________ Director June 20, 1995
Ruth H. Quigley
